Saturday, July 25, 2020

Managing Voter Perception

The following is an excerpt from the book, "India Unmade: How the Modi Government Broke the Economy" by Yashwant Sinha. 

Sometimes even a benign measure can have adverse consequences, like the national highway project. I later found that in 2004 we lost all the constituencies that lay along the Grand Trunk Road that goes from West Bengal and through Jharkhand, Bihar, Uttar Pradesh, Haryana and Punjab up to the Pakistan border. It was a paradox. The highways programme was the Vajpayee government's most outstanding project - his enduring legacy, the accomplishment now cited by even his staunchest political opponents - so we should have won in those very constituencies. We lost, however, because all highway encroachers were evicted. Even in my constituency of Hazaribagh, removing encroachers made a lot of voters angry. This is the political reality of India.

There is thus an argument to be made that there is no correlation between good work and getting re-elected. Any correlation is the first fallacy of punditry. Voting is only marginally connected to the work you might have done, or the government you were a part of. It is dependent on many other factors which may or may not work in your favour. 

The biggest factor is managing voter perception, a fact of which the Modi government is obviously keenly aware. Take the election in 1989, in which V.P.Singh overtook Rajiv Gandhi as Mr Clean because the Congress prime minister was bogged down by the Bofors scandal. Chandra Shekar as prime minister used to wonder out loud to me that V.P.Singh as Rajiv's finance minister had to have given approval to the Bofors gun procuremenet. Yet he was never stained by the scandal. Rajiv Gandhi's defeat by V.P.Singh was thus a result of perception management.

Saturday, July 18, 2020

Lies, damned lies and statistics

Say there are 100 people in a community and 5 of them are poor. The poverty rate is 5%. Say one of them dies of starvation. There are now 99 people and 4 of them are poor. The poverty rate is now 4.04%. The Leader puts out a celebratory announcement: The Poverty Rate has Declined by nearly 20%!
But is this really a good thing?
A similar trap awaits the unwary in the other direction. Say, again, you start with a population of 100, where only 5 are poor. The poverty rate is 5%. However, let’s say that these poor people are the strongest and healthiest of the poor. The weaker ones, especially infants, already died. The Leader pumps money into healthcare for the poor, focusing on reducing infant mortality. The next year the census reports that the population is now 105, of which 10 are poor. The poverty rate is now 9.5%. The opposition party puts out an accusatory press release: Under Leader’s Inept Rule, Poverty Rate Increase by nearly 100%!
But is this really a bad thing?
The error, in both cases, is confusing a 3-state variable for a 2-state variable. There are really three states: poor-living, non-poor-living, and dead. Looking at poverty rates fails to consider the dead state.

Saturday, July 11, 2020

Can We Depend on GDP Alone For Measuring Growth

The following is an excerpt from the book Hit Refresh by Satya Nadella.

Would you prefer to have $100,000 today or be a millionaire in 1920? Many would love to be a millionaire in the previous century, but your money then could not buy lifesaving penicillin, a phone call to family on the other side of the country, or many of the benefits of innovations we take for granted today.

Government should not have the goal of increasing GDP. It should try to improve the technology, business, freedom for the people, and make people lives more comfortable. With that, if GDP increases, it is fine. If not, that should not be a problem. Government should not do anything that increases GDP but reduces anything that impacts people.

Saturday, July 04, 2020

Ad by a state government on no Discrimination

Excerpt from an Ad by a state government, who files cases on people for their facebook posts.
No discrimination by caste and religion
50% Reservations to SC, ST, BC and Minorities
The above two lines are one below another in the ad (and not in different pages). Somebody, please explain them the meaning of "No discrimination by caste and religion".

Saturday, June 27, 2020

Business by Govt vs Private

Indian government filed cases against Telecom companies like Vodafone, Airtel and Jio saying, they have to pay tens of thousands of crores as dues. When the same rules are applied to few other companies (called as Public Sector Undertaking) like Power Grid Coporation, GAIL India and Oil India etc., the dues would cross one lakh crore. But, those companies don't need to pay.

For those, who say that, the original case was related to Telecom companies, the other companies also bought spectrum and the exact same rules can be applied. If it is unfair for the PSU companies, it should be unfair to Vodafone, Airtel and Jio as well. 

Of course, if government wants to change the rule, it would change to something like, if the revenue from X business is more than Y% of the company, then this rule is applied, and they carefully choose X and Y, in such a way that, the companies that they want to target would fall in that category. 

I don't see BSNL in the list. Does it mean, BSNL paid all the taxes and fees as per the rules set by the Govt, just like it set to any other private telecom company? If it had really paid the taxes and fees as per the rules, what is the overall profit (or loss) of BSNL? If it is in losses, does it mean, a common man has to pay the tax/fee because of the mismanagement of the company? 

All the state governments run the buses. If any private player wants to run a bus, first they have to get a permit. The permit amount is pretty huge. Apart from paying the permit amount, they need to get the approval from the concerned minister/official. That permission would cost them a lot unofficially. Government run buses won't pay any permit fees whatsoever and obviously, they don't need to pay any amount unofficially. But, the private bus operators have to fight with the government run buses on the fare. On peak days, when the private bus operators increase the fare, we would crticize them for exploiting. 

Air India is in losses. Still common man is paying for the losses of running Air India. If the same thing happens to private operators, the company would be closed down, like King Fisher or Jet Airways. Only the shareholders of the company would lose and not the common man. 

The profit and losses are calculated differently for government and private companies (May be except in the sectors that are reformed like Coal etc.). When the government industry is trying to get something out of the natural resources, the revenue minus the expenditure is considered as profit. Whereas, for the private industry, one has to deduct the license fee to extract the natural resources, which is typically more than all other expenditures. When that government industry is in Profits (on books), the employees would fight for increase in the salaries, bonus etc., saying it is in profits. Many times, the profit that they say the got is far less than the license fee they would have got, had they given to a private player in fair means. 

Everyone says, Private companies are exploiting. But, in reality, Government is exploiting private sector and trying to show as if the private companies are demons. 

Eventhough India got partial Independence in 1991 (No. It did not get it in 1947), still Government is trying to reduce the freedom of the companies with something or other.