A Pyramid Called Amway

Something unusual happened a couple of days ago. The chief of Amway International, William S Pinckney, got arrested by Kerala Police, on charges of fraud and money laundering, under a little-known law called the "Prize Chits and Money Circulation Schemes (Banning) Act, 1978" (PCMCS).

Pinckney is no small fry - he heads a company that has a presence in about 60 countries. In India, Amway is the 5th largest FMCG company in terms of revenue; it has 145 offices, 65 warehouses, and a presence in 80 cities across the country. The company has 36% of the Rs.6300 Cr direct selling market in India.
Direct selling is Amway's biggest strength but the method it adopts seems to have turned it into a great weakness as well. Unlike, say, Eureka Forbes which sells vacuum cleaners to customers directly, Amway network of 1.5 million direct distributors look very much like the bricks of a pyramid scheme. In this model, customers are made the company’s agents who sell the products to other people directly. In other words, the agent-turned-customer will not get a commission directly. He has to rope in others through sales. So the network will keep growing inexorably...until somebody at the bottom of the pyramid crumbles, cries foul and takes legal action.
To be sure, the law itself (PCMCS Act) is rather vague on the issue. It does not mention anything specifically about Multi-Level Marketing or Pyramid Schemes. The closest we get is through Article 2(c) - "Money Circulation Scheme", which is defined as -

(c) " money circulation scheme" means any scheme, by whatever name called, for the making of quick or easy money, or for the receipt of any money or valuable thing as the consideration for a promise to pay money, on any event or contingency relative or applicable to the enrolment of members into the scheme, whether or not such money or thing is derived from the entrance money of the members of such scheme or periodical subscriptions;

In this case what seems to be 'circulating' is the huge margins that go with the company's overpriced products. 
This being a Central Government Act, it specifies (under Article 13) that each state government can make it own rules for implementing this law. So this might explain why Kerala government decided take action on the basis of locally registered complaints.

However, one things remain unclear: Does Amway have the same pyramidal set-up in other countries? Isn't the company's home country a lot tougher on anything that looks like a Ponzi scheme?

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REFERENCE / LINKS

* Das, Surajit Das and Sounak Mitra (2013): Amway Surged by Converting a Multitude into Sales Agents, ET 29May13

- Amway is 5th largest FMCG company in terms of revenue - Dabur, Godrej, Marico, Colgate-Palmolive, ZGSK, Amway (R2288Cr), Emami, P&G, Gillette

- Star products - Nutrilite (50%+ of revenue) -- Glister toothpaste --SA8 liquid detergent --

- Also sells health insurance for MaxLife, Alliance and its own AmSure

- William S Pinckney + two directors - Anshu Budhraja and Sanjay Malhotra - arrested on 28May13 at Kochi -- under Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (PCMCS)

* 2013 (First Post 28May13): Amway India chief, directors get conditional bail: All you need to know --- http://www.firstpost.com/business/amway-india-chief-directors-get-conditional-bail-all-you-need-to-know-821041.html

* 2013 (Mint, 28May13) - http://www.livemint.com/Companies/zlg0Q8vFjJKf2MK577BO4H/Kerala-police-arrest-Amway-CEO-Pinckney-two-Indian-executiv.html

* What is a Pyramid Scheme? -- http://www.investopedia.com/articles/04/042104.asp

* Prize Chits and Money Circulation Schemes (Banning) Act, 1978 (PCMCS) -- http://indiankanoon.org/doc/1621737/

* 2013 (FT, 29May) -- http://blogs.ft.com/beyond-brics/2013/05/29/amway-india-snared-by-law-against-pyramid-schemes/?#axzz2UlsgLT00

* 2012 (Hindu BL, 28Dec) -- Kerala Mulls Law to Curb Money Circulation Schemes --- http://www.thehindubusinessline.com/government-and-policy/kerala-mulls-law-to-curb-money-circulation-schemes/article4249385.ece


* India Direct Selling Association (IDSA) -- http://www.idsa.co.in/

Murakami - Lost in Translation

This observation struck a chord:

The Japanese language acquires much of its beauty and strength from indirectness—or what English-speakers call vagueness, obscurity, or implied meaning. Subjects are often left unmentioned in Japanese sentences, and onomatopoeia, with vernacular sounds suggesting meaning, is a virtue often difficult if not impossible to replicate in English.

Is there any other language that uses onomatopoeia so extensively?

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LINKS:

Kelts, Roland (2013): LOST IN TRANSLATION?  The New Yorker, 9 May 2013 --- url -- http://www.newyorker.com/online/blogs/books/2013/05/lost-in-translation.html

Japanese Onomatopoeia -- http://www.tofugu.com/guides/japanese-onomatopoeia-guide/

Countervailing Buying Power

In India, the Competition Act, 2002, was amended in 2007 to create two new agencies: the Competition Commission of India (CCI) and the Competition Appellate Tribunal (CAT). CCI is expected to promote, regulate and sustain competition in the market while CAT is to help resolve any disputes.

Article 19 (4) of the Act states that CCI shall, while 'inquiring whether an enterprise enjoys a dominant position'...have due regard to a number of criteria, one of which is  "countervailing buying power".

What is Countervailing Buying Power?

Buying Power is "the ability of a buyer to influence the terms and conditions on which it purchases goods”. This is fairly straightforward. Large supermarkets like Walmart are in a position to drive a hard bargain from its suppliers. In exchange for large volumes and access to developed markets, manufacturers (eg., Knitwear from Tirupur) are forced to strip down their margins to the bare minimum, and this, is supposed to help the supermarkets offer sharp discounts to their customers.

The word 'Countervailing' is a little more complicated. It is most often used in the context of international trade, as in Countervailing Duties (CVD), which are taxes imposed by a government to prevent cheaper imports from running the domestic manufacturers out of business. In India, CVD is additional duty of customs is levied to offset the disadvantage to like Indian goods due to high excise duty on their inputs.

So Countervailing Buying Power is something that helps bring down the cost of a product when manufacturers (sellers) seeks shelf-space in a supermarket. It is often used as a defense in merger cases, to paint a picture of powerful buyers rising up to seller power. For instance, Walmart and Ikea often proclaim that they are able to supply relatively cheaper groceries or furniture because they are able to able to drive a hard bargain with their suppliers.

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REFERENCES / LINKS

http://www.investopedia.com/terms/c/countervailingduties.asp
http://business.gov.in/doing_business/customs_duty.php
Central Excise Act, 1944 -- http://business.gov.in/outerwin.php?id=http://www.cbec.gov.in/excise/cx-act/cx-act-idx.htm
Why is Countervailing Duty Important? (MoneyControl) - http://www.moneycontrol.com/news/advertising/why-levycountervailing-duty-is-important_822635.html

Wondering about Mt. Kailash

Pick a random place South Delhi and chances are that it is named after the 'abode of Shiva', Mt. Kailash. You have Kailash Colony, Greater Kailash-I, II, III, IV, East of Kailash and West of Kailash. Elsewhere in Delhi, you will find Kailash Apartments, Kailash Hospitals and...the list is endless.

This fondness for Kailash goes much beyond Delhi. The Buddhists say three of their main Buddhas -- Manjushree, Avalokiteshwara and Vajrapani -- all live there in the mountain. The Jains say Rishabh lives there and South Indian mysticism says their greatest yogi, Agasthiya Muni, who is the basis of South Indian mysticism and is one of the seven direct disciples of Shiva, lives in the southern face of Kailash.

How and when did this mountain located beyond the Himalayan ranges, in far-away Tibet, come to occupy such a prominent place in our imagination?

What makes Mt. Kailash truly exceptional is the fact that it lies well beyond the other popular places of worship in the Himalayas. Most of these are located along the tributaries and glaciers that feed the great rivers. But to reach Mt. Kailash, you need to travel along the Kali river valley that cuts through the breadth of the Himalayas. Then, once you are on the other side Lipulekh Pass, on the Tibetan plateau, another long trek takes you between the twin lakes Rakshas Tal and Manasarovar before you finally reach the Mt. Kailash area.

How on earth did the ancient pilgrims find their way to this mountain??

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LINKS

http://www.huffingtonpost.com/sadhguru/pilgrimage-to-kailash-the-mystical-library_b_3121912.html
Pics from - http://en.wikipedia.org/wiki/Mount_Kailash and KMVN
http://www.euttaranchal.com/tourism/adventure/kailash_mansarovar_yatra_itineary.php

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The Silence on Ranbaxy

The corporate equivalent of a sledgehammer hit Ranbaxy last week and there has barely been a ripple in the Indian press.

The silence is rather surprising given the fact that Ranbaxy is one of the largest pharmaceutical companies in the country, and the fine imposed on it by US-FDA is no less than $500 million (~Rs. 2500 Crores). An NRI whistle-blower named Dinesh Thakur got $ 43.8 million (Rs. 266 Crores) for exposing the drug company for being dishonest about the safety and efficacy of its drugs.

Fortune magazine published an article describing in detail, the "epic inside story of long term criminal fraud" at Ranbaxy. The tone and tenor of the piece was not exactly balanced for it gave the overall impression that generic drugs were a risky proposition compared to the more expensive 'branded' ones.

A good example of this was the description of Thakur's personal experience with his company's products. It seems his own son recovered from a persistent fever & infection only when he switched from a Ranbaxy drug to a 'brand-name antibiotic' (amoxiclav) produced by its competitor, GlaxoSmithKline (GSK). It might have been worth mentioning at this point that GSK's record too has been less than stellar when it came to drug safety. Just a couple of years ago, in 2010,  GSK paid $750 million in criminal and civil fines to resolve a federal whistle-blower suit that highlighted problems at a factory in Puerto Rico.

Now, whistle-blowers and payoff's aside, the big question that is likely to hit an Indian reader is this: If Ranbaxy has been fudging data and selling dud drugs in Africa, Latin America and USA, what about the stuff it has been selling to hospitals and patients in India?

Its only yesterday that the Economic Times published a response from the Drug Controller General of India's (DGCI). A DGCI officer who 'did not wish to be named', states that they had inspected the plants in question (Dewas and Paonta Sahib) but found "found nothing particularly alarming about the facilities".

Nothing particularly alarming? One would have expected a government organisation to be more forthcoming about public safety. Did DGCI do any random sample tests of Ranbaxy drugs that were already in the domestic market? Did they find any traces of active ingredients - or glass powder - in any of them? Did any hospitals complain about poor-quality drugs from Ranbaxy?

Until credible answers emerge, I guess we would all be warily looking for alternatives to Ranbaxy's product line.

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REFERENCES / LINKS

* FDA - Regulatory Action Against ranbaxy - http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/EnforcementActivitiesbyFDA/ucm118411.htm

* 2010 - The Guardian, UK -- GlaxoSmithKline whistleblower awarded $96m payout --- http://www.guardian.co.uk/business/2010/oct/27/glaxosmithkline-whistleblower-awarded-96m-payout
- Cheryl Eckard - Whistleblower who exposed contamination problems at Glaxo plant in Puerto Rico receives $96m
- Lawsuit doc in full - http://image.guardian.co.uk/sys-files/Business/documents/2010/10/27/glaxonew.pdf

* 2013 - First Post Business -- After swallowing bitter pill, Ranbaxy set to revive sales in US -- http://www.firstpost.com/business/after-swallowing-bitter-pill-ranbaxy-set-to-revive-sales-to-us-787055.html

* 2013 (ToI) - http://timesofindia.indiatimes.com/Business/India-Business/Whistleblower-feels-relieved/articleshow/20056271.cms

* 2013 (ET, 22May) - http://articles.economictimes.indiatimes.com/2013-05-22/news/39445394_1_ranbaxy-labs-drugs-us-regulator

* 2013 (BS 22May) - http://www.business-standard.com/article/companies/after-us-india-to-probe-ranbaxy-s-documents-113052101067_1.html

Recent Articles:

* 2013 (WSJ-Mint) - Ranbaxy Holds up an Ugly Mirror to Corporate India -- http://www.livemint.com/Opinion/1wbHWnjJBsrKgXKz3o76QL/Ranbaxy-holds-up-an-ugly-mirror-to-corporate-India.html
. What was cooking in Ranbaxy’s labs over nearly five to six years was never under any supervision. That exposes the lack of teeth and, perhaps, even moral responsibility of the Indian Pharmaceutical Association (IPA), the association of drug companies. What’s worse, not till the FDA’s actions did the Central Drugs Standard Control Organization, the designated Indian regulator, initiate any action against the company whose drugs are among the pricier and more popular ones in the Indian market.

* Narayan, Laxman (2013): A Deception Most Fowl, The Hindu, 26May13- http://www.thehindu.com/business/Industry/a-deception-most-foul/article4753453.ece?homepage=true
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Notes:  Allegations against Ranbaxy
- cutting corners + lax manufacturing practices + outright fraud
- knowlingly selling sub-standard drugs worldwide.
- Misusing the 'honor system' in drug applications (data provided by companies themselves)
- Ranbaxy "took its greatest liberties in markets where regulation was weakest and the risk of discovery was the lowest".
- Manipulated almost every aspect of its manufacturing process to quickly produce impressive-lookin data that would bolster its bottomline.
- Lying to regulators, back-dating (even its own SOPs) and forgery were commonplace.
- Internal report showed that of the 163 drug products approved and sold since 2000, only eight had been fully and accurately tested...the rest was phony data.


Timelines:
. 2002 - Dinesh Thakur leaves Bristol Myers Squibb (BMY) to joine Ranbax , Gurgaon
- 2003 - Thakur joins Ranbaxy
- data problems with - Ranbaxy's version (Riomet) of diabetes drug Metformin --- also with acne drug Isotretinoin
- Sotret - Ranbaxy's version of the acne drug Accutane
- Generic version of Pravastatin - a cholesterol lowering drug
- Anti nausea drug, Kytril (Roche)
- 2006 - Malvinder Sing succeeds Brian Tempest as MD & CEO
- 2008, Jun - 34% stake sale to Daiichi Sankyo for $2b - $4.6b
. 2008 - court filing by US Justice Department
- 2008 - FDA halts import of 30 different drugs from two of Ranbaxy's manufacturing plants in India + invokes "Application Integrity Policy" stopping review of any new drugs from its Paonta Sahib plant.
- 2010 - mounting recalls - pediatric antibiotic Amoxicillin and Clavulanate pottasium
- 2011 - FDA permits Ranbaxy to make a generic version (atorvastatin) of a popular drug "Lipitor" (anti-cholesterol drug from Pfizer)
- 2009 - caught with 12 boxes of generic drug, Isotretinoin (Roche)
- 2012, Nov - Ranbaxy recalls millions of pills after glass particles were found in some of them.
- 2012 - Justice Dept places Ranbaxy under sweeping "consent decree" - until quality verification and external audit of its plants.
- 2012 - Ranbaxy continues to grow - becomes the fourth-fastest-growing pharma company in the US (sales + prescriptions)

Policy:
- Freedom of Information Act -- used for getting FDA docs on Ranbaxy
- Hatch-Waxman Act 1984 - created a pathway - Abbreviated New Drug Application (ANDA), which allowed a generic company to simultaneously challenge a patent and demonstrate to FDA that it could make the drug. As a reward to taking the risk of almost certain litigation (from patent holder), the winner got six months of exclusive sales after the patent lapsed.
- Patriot Act 2001 - made it difficult to purchase and transfer drugs out of USA

Numbers:
- Global market for generic drugs is $242 million
- Ranbaxy is the sixth largest generic drug manufacturer in USA with more than $1 billion sales (2012). Its global sales is $2.3 billion.
- US regulators inspect only 11% of foreign drug manufacturers and 40% of domestic ones.

Borgias, Chaos, Creativity & Decentralization

In Italy for 30 years under the Borgias they had warfare, terror, murder, and bloodshed, but they produced Michelangelo, Leonardo da Vinci, and the Renaissance. In Switzerland they had brotherly love - they had 500 years of democracy and peace, and what did that produce? The cuckoo clock.   - Harry Lime in the Third Man (1949)

This perceptive and amusing movie dialog came to my mind while reading Amish's piece in the Hindustan Times titled, "The Centre Doesn't Hold". Amish's argument was that a decentralized  messy and politically divided land is actually good for innovation.

Amish points out that America's lead in innovation can be traced back to the fact that US constitution has focused on states' rights, keeping the federal government relatively weak. In pre-colonial India too "our political divisions allowed our innovators and free thinkers to have options. If the Palas didn't like your ideas, you could go to the Cholas. If the Tuluvas of Vijaynagar didn't like your thoughts, you could go to the Bahmani Sultans. Since we were culturally one country, travel was easy. Decentralisation helped innovation and kept us rich".

Post independence, we adopted to a Constitution that was designed to keep power & control firmly in the hands of a Viceroy, and, in the bureaucracy, simply exchanging white sahib's for brown sahib's. We paid the price for this  centralized 'iron framework' through stifling economic policies from the 1950s to 1991. Perhaps this was just as well because, because, in the bargain, our institutions have become strong enough to manage political disagreements with less chaos and violence.

Since we are unlikely to be like Switzerland in the foreseeable future, will the next round of coalition governments in India lead us into an era of chaos, innovation and creativity?

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LINKS

* 2013 (HT): THE CENTRE DOESN'T HOLD -- http://www.hindustantimes.com/News-Feed/ColumnsOthers/The-centre-doesn-t-hold/Article1-1059653.aspx

* IMDB - The Third Man (1949) - Quotes - http://www.imdb.com/title/tt0041959/quotes

Daulat Beg Oldi

 WikiMap: The Tibetan plateau

Daulat Beg Oldi. The first time I head about this place I readily assumed that it had been named after a soldier who died in action. I thought "Oldi" was a nickname.

Much like the Bana Post on the Siachin Glacier, I pictured a small stone memorial  standing dwarfed by the barren, inhospitable Himalayan heights -- the Karakoram range on one side and the Kunlun mountains on the other.

This picture just fell apart when I came to know that Daulat Beg lived & died long before anybody demarcated India or China on any map, and even a few centuries before the "Great Game".  It turns out that he was a merchant from Yarkand who could not take the stain of crossing the Karakoram pass, sometime in the 16th century...

Somehow this puts the recent India-China standoff in an altogether different context. It opens your mind to a world of silk traders who risked life and limb in search of profit,  and of monks who trekked across these very mountains to introduce Buddhism to Central Asia...

And what does "Oldi" mean? Simple - its just meant to tell you that 'Daulat Beg Died Here'!

WikiMap: DBO is at the junction of the pink and grey zones

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LINKS

http://library.thinkquest.org/10131/ladakh_shyok_burtsa_ao.html

Travels of Sven Hedin - http://en.wikipedia.org/wiki/Sven_Hedin

CBI : From Jain Hawala Scandal to CoalGate

"Parliament (is now) adjourned sine die, without conducting any significant business, as if we elect representatives simply to leave everything in abeyance...The government has no sense of propriety, shame, ethics or common prudence...The responsibility for a culture of corruption, evasion, lying and sheer contempt for institutions lies directly at the door of Sonia Gandhi and Manmohan Singh. Their air of injured innocence has become nauseating..."

The gloves are now off: In his latest op-ed published by the Indian Express yesterday. Pratap Bhanu Mehta, president of CPR has been particularly scathing about the conduct of the present government.

When he writes about "lying and sheer contempt for institutions", he is, of course, referring to CBIs handling of the Coal Report. One thing that keeps coming up in most reports on CBI is the Vineet Narain Judgement.

What is the Vineet Narain Judgement?

This story begins in 1991 when a militant from our friendly neighborhood named Ashfak Lone was arrested by Delhi Police. His interrogation led the CBI to a businessman named Surinder Jain and to his notebooks & dairies containing details of payoffs in meticulous detail. According to the CBI report, "The initials (in the dairies) corresponded to the initials of various high-ranking politicians, in power and out of power, and of high-ranking bureaucrats". When no follow-up action was taken by CBI for nearly three years, a journalist named Vineet Narain filed a public interest litigation (PIL) under Article 32 of the Indian Constitution.

As luck would have it, this PIL case - by now famous as the "Jain Hawala Scandal" - landed at the table of J.S. Verma, one of the most respected judges of in India (now, alas, no more). In his judgment (1997), it was ruled that "superintendence over CBI's functioning" would be shifted from the line ministry to an independent statutory body, the Central Vigilance Commission (CVC).

CVC was now directed to "review the progress of all cases moved by the CBI for sanction of prosecution of public servants which are pending with the competent authorities, specially those in which sanction has been delayed or refused".

Seen in this context, its hardly surprising that the Supreme Court is doubly upset with CBIs and the government's handling of the Coal Scam investigations.

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REFERENCES & LINKS

* Mehta, Pratap Bhanu (2013): PHANTOM DEMOCRACY, Indian Express, 9May13 -- http://www.indianexpress.com/news/phantom-democracy/1113222/0#sthash.mwGBqsLE.dpuf

* Supreme Court Judgement - Vineet Narain Case - http://cbi.nic.in/dop/judgements/excrpts.pdf

* PTI (9May) - Coalgate: CVC seeks report from CBI on Centre's interference in probe --- http://www.thehindubusinessline.com/economy/coalgate-cvc-seeks-report-from-cbi-on-centres-interference-in-probe/article4699127.ece

* Reuters (9May) - Government meddled in CBI probe, says Supreme Court -- http://in.reuters.com/article/2013/05/08/india-politics-cbi-coalgate-idINDEE9470DZ20130508

* http://en.wikipedia.org/wiki/Hawala_scandal
* http://en.wikipedia.org/wiki/Jagdish_Sharan_Verma

Ray, Graphic Artist

How much can you pack into one life?


In an HT feature commemorating Satyajit Ray's 92nd Birth Anniversary, I was pleasantly surprised to know that the great man had left his mark, far beyond the world of books and cinema. He also excelled in typography and graphic art!


Here are some copies that grabbed my attention:

A campaign for the Tea Board

Booklet cover design

Jabakusum anti-hair-loss tonic! :)

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LINKS & REFERENCES.

http://www.satyajitray.org/

http://www.satyajitrayworld.com/versatility_advertisements.php

Ray on the net -- http://www.satyajitray.org/links/index.htm

Big Data, Small World

When a magazine like Foreign Policy comes up with an article titled 'The Rise of Big Data' you know that something has tumbled out of geekdom to the world of ordinary mortals.

The article talks about 'incredible new uses (of data) with the assistance of inexpensive computer memory, powerful processors, smart algorithms, clever software, and math that borrows from basic statistics'.  Instead of trying to “teach” a computer how to do things, the new approach is to feed enough data into a computer so that it can infer the possible answers on its own. 

India's ambitious UID project does not find mention here - perhaps its not big enough - but it does describe some amazing new uses of data. One of these is Prof. Shigeomi Koshimizu's "bottom-up" approach to establishing unique identities.

Prof. Shigeomi's team at AIIT-Tokyo placed 360 pressure-sensors on car-seats and found that when a person is seated, the contours of the body, its posture, and its weight distribution can all be quantified and tabulated and converted to a digital code that is unique to each individual!

Perhaps the day is not far when Indian's lining up for their UID cards will be spared the trouble of scanning fingerprints and of staring into machines for iris patterns. They would just have to just sit on a chair while somebody verifies their application and simply walk out with a biometric-id card..  :-)

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LINKS & REFERENCES

Cukier, Kenneth Neil  and Viktor Mayer-Schoenberger (2013): The Rise of Big Data - How It's Changing the Way We Think About the World, Foreign Policy, May/June 2013 -- url -- http://www.foreignaffairs.com/articles/139104/kenneth-neil-cukier-and-viktor-mayer-schoenberger/the-rise-of-big-data?page=show

Japanese boffins crack arse-based ID recognizer -- url -- http://www.theregister.co.uk/2011/12/27/japanese_bum_id_recognizer/

Boneless Wonder

"Where have I heard that before?"

This is the thought that crossed my mind when I read the following passage from a Private Member's Bill tabled in the Indian Parliament today:

(viii) Panchayati Raj continued on paper and Sarpanches got elected without any attendant charter of responsibilities and the financial powers that could have rendered their duties effective and meaningful;
(ix) despite the detailed enumeration of allocable functions to Panchayats in Eleventh Schedule (article 243 G) of the Constitution, the devolution of financial powers to make these enumerated functions meaningful and the non vacation of administrative space by concerned government departments, has resulted in rendering the Panchayati Raj a boneless wonder;

It turns out that the original expression comes from a circus advertisement that was used by Winston Churchill to flame Ramsey MacDonald in the 1930s. He is the original quote -

"I remember when I was a child, being taken to the celebrated Barnum's Circus, which contained an exhibition of freaks and monstrosities, but the exhibit on the program which I most desired to see was the one described as "The Boneless Wonder". My parents judged that the spectacle would be too demoralizing and revolting for my youthful eye and I have waited fifty years, to see The Boneless Wonder sitting on the Treasury Bench."
Winston Churchill On Ramsay MacDonald

It seems Ramsey M found himself quite often at the receiving end of Churchill's barbs. Here is another one -

"[Ramsey] MacDonald has the gift of compressing the largest amount of words into the smallest amount of thoughts."

For a wider sample of barbs & quotes, look here.

A Quake & Silence

At around 2:20 pm today, my chair trembled and moved on its own.

In the few seconds that followed, I closed my eyes and soaked in that familiar, dreadful silence.

Two years ago, on 7 March 2011, I was on my dining chair having a late lunch at Tsukuba-U when the 'biggest earthquake in recorded history' hit us in Japan. In the hours, days and weeks that followed, we moved from one evacuation center to another; struggled to access food and drinking water...and yet considered ourselves very, very fortunate to be a few dozen miles away from the tsunami that  devastated the Tohoku coastline left about 18,000 people dead or missing.

Today's tremors ended in a few seconds but the same old questions dangled in the silence: where was the epicenter? How many houses have come crashing down? How many lives have been lost?

The simple fact that the lights were still on and that the networks were still working told us that the tragedy had taken place somewhere far away. Still, nothing turned up on the internet until Reuters posted an twitter-update ten minutes later.

The complete story is now in -- that far-away-place is called Khash in South-East Iran. At 7.8 magnitude "more than 30 people are reported dead".

I set aside my nightmares, pull back my chair and get to work again...

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LINKS:

• Blogpost - "Quake Notes" - 11 April 2011 -- url -- http://dinakarr.blogspot.in/search?q=quake
• BBC - http://www.bbc.co.uk/news/world-middle-east-22168202
• Visvanathan, Shiv (2011): Tsunami's of the Mind, Tehelka, 9 April 2011 -- url --  http://tehelka.com/the-tsunamis-of-the-mind/: Interesting thoughts on "how a nation copes with disaster is a sign of its democracy’s health — and whether it can move beyond mere technofixes and plumbing stereotypes"

Bonds to the Rescue

H. Kuroda, the new governor of Bank of Japan made a dramatic announcement today. Instead of trying to keep the interest rates low, the bank would henceforth buy long-term bonds to force more money into circulation. This, hopefully, will encourage everybody to spend more and pull the Japanese economy out of its 20-year-long doldrums.

The point that caught my attention came in this para of an NYT report:

"the central bank said it would buy longer-term government bonds, lengthening the average maturity of its holdings to seven years from three years and expanding Japan’s monetary base to ¥270 trillion by March 2015. Under that plan, the bank will buy ¥7 trillion of bonds each month, equivalent to over 1 percent of its gross domestic product — almost twice the pace of the U.S. Federal Reserve."

Yen 270 trillion translates into Rs. 1.55 Crore Crores (155*10^12) and US$ 2.83 Trillion!
According to BoJ, Japan's current monetary base stands at Yen 146 trillion. So if all goes well the expansion is going to be about 50 percent in two years.

What is India's current monetary base?

According to a Reserve Bank of India (RBI) press release dated 22 March, 2013, India's latest recorded money supply (M3) stands at Rs. 73 Lakh Crores (73.5*10^12).

So the difference in money cirulating now in India, to what Japan expects to have in 2015 is the difference more than double our current levels -- Rs. 82 Lakh Crores (82*10^12)!

Note: All figures in US$ Trillion; India's monetary expansion is assumed to be 16%

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LINKS & REFERENCES


Japan - Monetary Base 2013 - http://www.boj.or.jp/en/statistics/boj/other/mbt/mbt1303.pdf

RBI - Growth Rates for M3 -- http://rbi.org.in/scripts/SPF17.aspx

Tabuchi, Hiroko (2013): JAPAN INITIATES BOLD BID TO END FALLING PRICES, NYT, 4 April, 2013 --- url --- http://www.nytimes.com/2013/04/05/business/global/japan-initiates-a-bold-bid-to-end-years-of-falling-prices.html?partner=rss&emc=rss&smid=tw-nytimes&_r=0
- The central bank said it would aggressively buy longer-term bonds and double its holdings of government bonds in two years, doubling the amount of money in circulation in the process. The bank will aim for a robust 2 percent rate of inflation “at the earliest possible time,”
- The policies are part of a new asset purchase framework that focuses on the monetary base instead of the overnight interest rate, which has remained close to zero for years doing little to increase prices or otherwise help the real economy.

* RBI Press Release on Money Supply -- http://rbidocs.rbi.org.in/rdocs/PressRelease/PDFs/IEPR1658RM0413.pdf

* George Soros's view - http://www.businessinsider.com/george-soros-on-bank-of-japan-2013-4?goback=%2Egmp_49695%2Egde_49695_member_229425408

Maria's Insects & Flowers

 

Thanks to today's unusual doodle, here is the remarkable story of a Dutch lady who loved to draw insects and flowers:

The Guardian - GrrlScientist (2 April 2013) -- http://www.guardian.co.uk/science/grrlscientist/2013/apr/02/maria-sibylla-merian-artist-insects-science

 

The Limits of Delimitation

1952, 1962, 1973, 2002, 2026...

Is there anything odd about this sequence?

For India, the mismatch in the last two years point to a fundamental problem -- an issue that has been postponed until another generation picks up the courage to resolve it.

The problem we examine here is that of "proportional representation" - the very basis of electoral politics in India.

The lower house of our parliament, the Lok Sabha is composed of representatives of the people chosen by direct election on the basis of the adult suffrage. The maximum strength of the House envisaged by the Constitution is 552, which is made up by election of up to 530 members to represent the States, up to 20 members to represent the Union Territories. The total elective membership is distributed among the States in such a way that the ratio between the number of seats allotted to each State and the population of the State is, so far as practicable, the same for all States.

Over the years, we have come far from the 'as far as practicable' scenario. Many states which have taken the trouble to improve healthcare and to control their population growth, are finding that they have been robbed of the power of numbers.

Under Article 82 of constitution, Parliament is required to enact a Delimitation Commission after every Census. The motive behind this act was to ensure that there is not much disparity in the population of different constituencies whether in Lok Sabha or in the state assemblies. Delimitation Commissions were set up in 1952, 1962 and 1973. During Emergency in 1976, the constitution was amended to not have delimitation till after 2001 census. The idea was to prevent disincentives for states which have managed to have some degree of population control.

However, the Constitution of India was specifically amended in 2002 not to have delimitation of constituencies till the first census after 2026. Thus, the present Constituencies carved out on the basis of 2001 census shall continue to be in operation till the first census after 2026.

Until then, should we keep our fingers crossed, and hope that the BIMARU states which are now in the midst of an economic resurgence will, somehow or the other, also manage to bring down their population?

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LINKS & REFERENCES

* What is Delimitation? (part-1-3) - http://www.indiavotes.com/blog/category/delimitation/

* Press Note (17 Aug., 2007) - http://eci.nic.in/delim/Press/PN_17082007.pdf
. the Commission has already issued final notifications in respect of 25 States.
. The work in three States, namely, Assam, Arunchal Pradesh and Nagaland has been stayed by the Guwahati High Court in Writ Petitions pending before the High Court. The appeal of the Union of India in respect of Manipur State is pending in the Supreme Court. In all these court cases the legality of the 2001 census has been challenged.
. The net result is that except the four above-mentioned, North-Eastern States, the delimitation process has been completed in all respects for 3726 Assembly Constituencies and 513 Lok Sabha Constituencies in rest of the country.
. Articles 82 and 170 (3) of the Constitution of India stipulate that the readjustment of Constituencies shall take effect from such date as the President, may by order, specify.

* Delimitation Commission of India - FAQs - http://eci.nic.in/delim/FAQ/FAQ.pdf

* http://en.wikipedia.org/wiki/BIMARU_states

* http://articles.economictimes.indiatimes.com/2010-09-24/news/27568301_1_regions-bimaru-growth-in-personal-income

Three Divers Make India Crawl

Three Egyptian divers damaged three undersea cables near Alexandia Port, and India's internet speeds have come down to a crawl.

What happened? Are our internet lifelines so vulnerable?

According to newspaper reports --

 "The current outages that affect three of the eight communications cables that connect India to the rest of the world — SMW-4, IMEWE and EIG — are likely to impact services provided by Bharti Airtel, Tata Telecommunications, Reliance Communications and public sector service providers BSNL/MTNL."

Which are these eight cables? What do these acronyms stand for?

• SMW-4 (South-East Asia-Middle East-Western Europe-4): One of the eight cables carrying traffic between Egypt and Europe. SMW-4 also carries voice and data communications between 15 countries, including Singapore, Malaysia, Thailand, Bangladesh, India, Sri Lanka, Pakistan, the United Arab Emirates, Saudi Arabia, Algeria and France.
• IMEWE (India-Middle East-Western Europe): is a 13,000 km cable system between India and France. It has cable landing stations at Mumbai, Karachi, the UAE, Saudi Arabia, Egypt, Lebanon, Italy and France.
• EIG (Europe India Gateway): Connects India with 11 European, African and West Asian nations.

What about the other five cables?

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LINKS & REFERENCES

Kurup, Deepa (2013): DUDE, WHAT'S WRONG WITH MY INTERNET SPEED?, The Hindu, 31Apr2013 ---url--- http://www.thehindu.com/sci-tech/technology/internet/dude-whats-wrong-with-my-internet-speed/article4564798.ece

Economic Times: http://economictimes.indiatimes.com/news/news-by-industry/telecom/bsnls-internet-capacity-down-due-to-cuts-in-undersea-cable/articleshow/19307846.cms

Ghosh, Sauvik (2013): http://www.livemint.com/Industry/dzPwMJvhTIkNmyjBavchvO/International-communication-links-in-India-to-be-hit-for-two.html
http://www.livemint.com/Politics/RhHb2bR1ZVIaarxSF5VqlK/Egypt-arrests-scuba-divers-accused-of-cutting-Internet-cable.html

Fleeting Reds

The Kosam trees (Schleichera oleosa) of Delhi put out a spectacular display last week.

Just two weeks ago these trees reminded me of the onset of Autumn in Japan. Like the Ginkgo's, the Kosam's too turned their otherwise unremarkable foliage into shades of yellow and dropped them off, leaving nothing but a skeleton of barren branches.

Then, unlike the Ginkgo's which remain barren until spring, the Kosam's sprout tender young leaves almost immediately. The leaves turn deep scarlet for a few days before turning into a regular green color.

What could be the evolutionary story behind this fleeting display? Is it meant to attract the Lac insects? Do they help in pollination?

Food for Thought

The National Food Security Bill 2011 is all set to be introduced in the second-half of the Budget Session of Parliament. The Bill presents a difficult set of dilemma's and conundrums.

On the face of it, there could be no cause which is more noble: using our surplus stocks of foodgrains to feed the poor. The Bill proposes to use large-scale food distribution to feed 67% of the country's population of 1.2 billion.

Yet, as always, the devil lurks in the details.

Where will the food come from?

Even though our FCI godowns are overflowing with foodgrains, the Bill needs our Public Distribution system to handle 74 million tonnes by 2013-14. However, just 29.7 million tonnes were lifted by states in 2009-10 as against 45.4 million tonnes allocated for the PDS!

Where will the money come from?

The official estimated cost is Rs.95,000 per annum. Experts say that this is a rather conservative figure. Gulati & Gujral (2011) calculated the minimum annual expenditure at Rs. 200,000 Crores. To put the amount in perspective, total subsidies budgeted for 2011 on everything was Rs 140,000 crore.

Can the existing logistics network handle this?

You could call this 'new wine in an old, leaky bottle'. Until inefficiencies in the existing distribution systems are addressed on a war footing, we might be sending more money than ever before, down the drain. To take one example, labour in FCI is highly organised and an unskilled worker (loading and unloading job) earns around Rs 35,000 per month -- much, much more than the average skilled worker.  According to reports, 'hundreds of such FCI workers get more than Rs 1 lakh a month and the highest is about Rs 1.85 lakh per month'.

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LINKS & REFERENCES

The cost of Food Entitlement

* Aggarwal, Ankita and Harsh Mander (2013): ABANDONING THE RIGHT TO FOOD, EPW, Feb 2013 -- url -- http://www.epw.in/commentary/abandoning-right-food.html --- http://centreforequitystudies.org/wp-content/uploads/2013/02/Abandoning_the_Right_to_Food.pdf

* FE Editorial: NOW TO DIGEST THAT FOOD, 19 Dec. 2011, Financial Express, 19 Dec., 2011 -- url -- http://www.financialexpress.com/news/fe-editorial-now-to-digest-that-food/889477
- To put the amount in perspective, total subsidies budgeted this year on everything are R1.4 lakh crore.
- spends 5-6 times more on farm subsidies than it does on farm investment where the returns in terms of poverty reduction and higher farm growth are several times higher.
- other distortions like the Essential Commodities Act that allows states to ban movement of agri-commodities and suspending futures markets to the APMC Act that allows commission agents to take away as much as 15% of the farmers revenue

* Gulati, Ashok and Jyoti Gujral (2011): "FOOD SECURITY BILL: Can we afford Rs. 6 lakh crore food subsidy in three years?", The Economic Times, 17 Dec., 2011 -- url -- http://articles.economictimes.indiatimes.com/2011-12-17/news/30528849_1_food-subsidy-subsidised-grain-priority-households
- The farmers are not happy as the MSP for wheat and rice has gone up by less than 20% against a cost escalation of about 45%.
- But Punjab imposes 14.5% taxes and various forms of cess, etc, on top of the MSP for any procurement of grain being done from the state. The argument is that many states have minerals and they impose large royalty on their mineral wealth.

* PRS Legislative Brief - NFSB-2011 - http://www.prsindia.org/uploads/media/Food%20Security/Legislative%20Brief%20National%20Food%20Security%20Bill%202011.pdf

* Swaminathan, MS (2009): SYNERGY BETWEEN FOOD SECURITY ACT AND NREGA, The Hindu, 1Jun2009 ---url---http://www.hindu.com/2009/06/01/stories/2009060153470800.htm

Visualizing India's Electorate

Data visualizers are now turning their attention to Indian politics!

Here is an interesting presentation by S. Anand of Gramener.com --

Visualising politics from gramener

Not all slides are communicate  clearly but, on the whole, one does get a flavor of the complications involved in Indian electoral politics.

Anand's blog is also very cool: http://www.s-anand.net/

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REFERENCES / LINKS

* Four Color Theorem - (1976) by Kenneth Appel and Wolfgang Haken. It was the first major theorem to be proved using a computer. Wiki -- http://www.s-anand.net/

Sanctioned, Allocated & Released!

During the ongoing Budget Session of the Indian Parliament, numbers linked to three words are a source of much angst and analysis -- sanctioned, allocated and released.

Most often, 'sanction' refers to the amount of money notionally set aside by the Planning Commission of India towards implementation of its "Five Year Plans". Once a sanction has been made, the Ministry of Finance uses it as a reference number while 'allocating' budget for each activity listed its annual plans.

Now, allocation is linked to the extent of utilization. So the amount that is finally released for work on the ground may be a fraction of what was originally sanctioned by the planners.

Take for instance a flagship scheme which goes by the unweildy acronym - JNNURM. This is the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), created to 'encourage reforms and fast track planned development of identified cities'. In all, 73 cities were identified across India, and the Planning Commission 'sanctioned' Rs. 66,085 Crores (~$13 billion) for a period of seven years (2005-11).

Since 2005, the actual money allocated through the annual budgets passed by the parliament has been 73 percent -- Rs.47,967 Crores ( ~$ 9.5 billion). Allocations have fallen short of targets mainly because many states could not put in place, a set of four "mandatory reforms' -- (1) Implementation of decentralization measures as envisaged in the 74th Constitution Amendment, (2) Reform of the Rent Control Act and rationalization of stamp duty, (3) Repeal of the Urban Land Ceiling Act, and (4) Enactment of public disclosure law and community participation law.

All states have initiated these reforms but none have implemented them fully. Oddly enough, Tamil Nadu, which has the lowest rate of reform-implementation at 25% has the highest number of completed projects at 68%!

According to a CAG report submitted last year (28 Nov., 2012), only 17 percent of sanctioned projects under urban infra, have been implemented (231 of 1298). The record is even worse for housing projects: 22 of 1517 projects -- just one percent!

So, in the final reckoning, only Rs. 32,934 (less than 50%) of the original money sanctioned has been 'released' for completed projects between 2005-2011.

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LINKS / REFERENCES:

* Ministry of Urban Development - Home Page - http://jnnurm.nic.in/state.html

* JNNURM Overview -- http://jnnurm.nic.in/wp-content/uploads/2011/01/PMSpeechOverviewE.pdf
- selected cities (7+28+28) - page 14

* PRS Blog -- Status of JNNURM (7 Dec., 2012) - http://www.prsindia.org/theprsblog/?p=2330