SPC dialectic

This week began with tabling of SPC report in the Parliament. Speculations were rife about the salary hike recommended in the report. As expected, the hike came in the range of 40-60% of the current take home. The percentage varied for different scales of entire central government cadre. Media - print, electronic or Internet based - is abuzz with the expert discussions about the feasibility, impact, worth and ilk of the SPC award. It's sorry to note that the word 'experts' has, sort of, lost its meaning.

Talking of feasibility of the SPC award, the monetary size is trifle looking at country's GDP (circa 0.5%). Government has buoyant revenue collection in last few fiscals, thanks to the booming market conditions. Based on this premise, government has formulated umpteen social schemes, NREG being the prominent. The annual outlay of NREG (2007-08: 12k cr) itself well exceeds the annual SPC award amount (8k cr).

The impact of SPC award, nevertheless, has been met with all but negative sentiments. Everyone is suddenly talking of spiralling fiscal deficit; the SPC worsening it furthermore. Interestingly, the award amount is visualised only as fiscal deficit! It's sounds more like the amount being poured straight into the drain. Arithmetic total of the political largess like farm loan waiver (50k cr) and failed schemes like NREG, and the oil and fertiliser bonds (54k cr and 7k cr, resp.) is many times higher than the SPC award amount. How fair and valid are farm loan waivers, from the view of economics, is a separate issue. Bailing out oil companies by issuing oil bonds is, certainly, regressive economics. Not only it keeps the oil companies artificially out of the red, it fails to dissuade people from cutting oil consumption. Moreover, such naively imprudent fiscal policies and measures, done mostly for immediate benefit, hamper the economy in the long run. Given the high percentage of anti incumbency voting trend in the country, if the current government gets voted out, the following one gets an overhead of such bonds, totally uncalled for. The SPC award (and arrears) would come with TDS, meaning almost a third of the amount never leaves the government coffers. The lump sum amount received would go into purchases ranging from car to house, providing additional taxes. Rudimentary estimates assure that the government would get back around 40% of the SPC award amount. Any of this won't happen in the aforementioned politically motivated actions.

The issue of worth of SPC award, however, has got the most banging. All and sundry have come out unanimously stating that the award is worthless - unjust, in view of some - for it manures the perfunctory government machinery. Another case of extremism. No so longer, the very same government job was considered coveted, given its security and associated 'luxurious' life. The present generation scathing the government machinery may first ponder over the fact that it's the immediate two generations - of their fathers and grandfathers - they are calling defunct, as government was - and is - the biggest employer in the organised sector. It's not about disrespecting. It's more of being careful while uttering such generalisation. It isn't a great situation being into, if one has to swallow ones words back. Accusations of bribery, pilferage and tax evasion are being slammed with vengeance. It's amusing to note the innocent take of the common masses in this regard; bureaucracy as the dark side, private enterprise as spotless charactered heroes. One can be amazed to note the novel ways devised by the private enterprises to evade taxes, just to spill the truth.

The point is not to defend the award or the awarded. It's to highlight such points which never see light of the day. Does government need to sell grains at discounted price and recover the deficit by taxation? Even better, does government need to buy the grains, store them and sell it, in the first place? Should government be into the business of producing fabric and sitcoms, both, and at the same time? Should government ply buses and run railroads? Does government need to continue sending postal mails in the age of mobiles, SMS, emails and IMs? Does government need to conjure up textbooks? Government is supposed to govern; frame and enforce laws, regulate - not run - the businesses, fostering competitiveness, while ascertaining fair play for all players - startups or otherwise - and, ensure law and order. That surely require manpower. As much as the present? Unlikely.

Nano

Few days back, Tata Sons revealed there ultra low cost B segment car Nano. The name, perhaps, signifies more of it's cost than it's dimensions. Indian roads have been infested with much ugly Maruti 800 which comes for full one lakh more, since quarter of century. Nano comes as a welcome change. It's not only affordable but also quite an asset.

At inception of the idea of the ultra low cost car, the entrepreneur and his enterprise was ridiculed of offering customers with a ramshackle. With Nano standing clear with Euro IV and Bharat III emission norms along with Indian frontal collision norms, all such persecutors are seen hiding faces. On design parameters, the vehicle offers more space vis-a-vis any of its counterpart and is much lighter. Regarding looks, it's quite hip. Yes, the engine is little less powerful. However, one must acknowledge that the enterprise was committed to stick to the one lakh tag. In the luxe model, we can expect even higher capacity engine, while the standards and rest of the fitments retained. Extrapolating from vehicles current ex-showroom price, the luxe model should still cost cheaper to it's ugly rival. Nevertheless, the engine still needs special mention for it has been crafted specially for the car suiting it's design and expected to offer mileage of 20 KMPL in city conditions.

With all these goodies offered, troubles are expected. It's rather disappointing to note the inability to appreciate the feat of an enterprise that delivers a quality product. Chiefs of rival enterprises were heard offering suspicions on on-road performance of the vehicle. A bunch of hypocrites calling themselves as environmentalist declared this miracle of technological wizardry as a nightmare for already deprecating health of environment. Some other silly 'activists' equated the establishment of Nano manufacturing plant to Capitalist imperialism. A few of these ever driveled that the car is being made for rich on the blood of the poor!

Tats Sons have offered yet another indigenous product from its stable. Something, perhaps, none of the auto industry rivals have done or dared to. Moreover, the Bajajs should better have a closer look at their stable before commenting on (the quality of) Nano. The group has always offered third rate machines let it be famed scooters (that assured bumpy ride) or the all-weather-trouble three-wheelers. Maruti can also do a reality check whether their Omni clears the latest frontal crash norms.

Blabbering about environment has become a fad. While applauding the noble prize for Global Warming, hardly anyone realize that per capita energy consumption has shot up exponentially in last two centuries. It has given so many comforts of life, including mobility. Objective should be to compensate for the environment by crusading for scrapping old inefficient and polluting vehicles and not against newer high-tech ones a la Nano, that clear latest - and supposedly, more stringent - norms. Protests should rather be made to remove diesel engines - cars, trucks and railways - which pollute more and much toxic.

The 'activists' are, incidentally, an irate lot that start capering around any proposed developmental site in the name of protection of incumbents' rights. Rehabilitation is undoubtedly an important step in any of economic activity. But perpetrating misinformation to the innocuous uninformed incumbents and hence halt the entire activity is uncalled for. Delays in project doesn't only mean delay in receiving the fruits of the investment but also a plain increase in the total cost of the project. Both, delay and higher cost ultimately affect the poorest the most for whom, ostensibly, the entire farce is enacted by the 'activists'. One should better check up with the resettled and rehabilitated people, over last couple of decades, to witness how well they have been compensated. The problem, as it turns out to be, is not the compensation but the incurable ailment of demanding more than deserved.

On the debate of personal versus public transport, it's surprising to note why government is ultimately looked upon. Government's job, for that matter, is to frame laws and not ply buses. There is no such law that there can't be privately owned public transport for cities, metros or otherwise! Private transport is more of comfort, if not luxury. Public transport, however, can be comfortable too, provided cost is borne by the commuters. Commuting on subsidized fares will eventually result into substandard infrastructure. Besides, privately owners won't run loss making enterprise (for long). What is required, is subsiding the attitude of persecuting achievers to veil self incompetency, and bringing in that of paying rightful credit (and price) to the owner. That's demanding a Mega for a Nano, perhaps.