Two to Tango: IPL and GST, a match report!

Dear Reader,

Hi! Here’s a piece on what happens when Parliamentarians are gripped by the IPL fever 🙂

This piece appeared in my column “Tweakonomics” in the Hindu Business Line today. You can read it at http://www.thehindubusinessline.com/opinion/columns/two-to-tango/article9631178.ece, or read it here directly. Cheers!

—————————————————————————————–

Team FM was celebrating. They’d pulled off the GST feat in record time i.e. before the IPL began. Many of the NDA MPs had threatened not to be present if the Bills were not introduced before April 5. That had got FM Jaitley really worried. He had been pushing his team hard, and yet, some of those clauses looked tricky. “A strategic time-out, that’s what we need,” he told his beleaguered team, working out the clauses yet again to make them Chidambaram-safe. “Such express pace! If only there was an assured follow-on in 2019. Then we’d have done this in style!”

But the PM was pitching it hard and had asked him to put his best foot forward. He had to deliver not only the doosra and the teesra, but also the choutha! The Central GST Bill, Integrated GST Bill, Compensation (to States) GST Bill and the UT GST Bill, all at the same time. And all this with the Delhi Daredevil mufflers breathing down his neck.

To add to his troubles, there was Chennai Super King P Chidambaram in the Rajya Sabha muttering about how he’d goofed up in writing the clauses of the GST, especially with the wording of the anti-profiteering clause. With the anti-profiteering clause, the FM had just wanted to make sure that if companies were not passing on reduction in the GST rate to the consumers, there would be a third umpire to examine the case. “The presence of the third umpire is ok,” said the Super King snootily. “Who is the selector, is what worries me. Unorthodox and draconian, is my verdict. Howzzat!”

The BSP had another set of issues. In the first year of implementation, an offence, if compoundable, should not be non-bailable, they kept on hankering. Normally, the stumps hold the bails, grinned the FM to himself. But here the bails have them stumped. Heehee!

But his team had delivered. On March 29, all four supplementary GST Bills were passed in the Lok Sabha by voice vote. It was actually just a noisy out-break of relief that the damn thing was done before April 5. It meant that the entire “Wah bhai Wah” IPL season could now be enjoyed happily in front of the TV without worrying about how to ask intelligent questions and participate in the debate tomorrow just as Lasith Malinga came out with that Yorker. “Neat thrownnnnnnn,” roared the Gujrat Lion, pleased with the new phrase, new bill and new year. It sounded very English, and yet, had the pleasant Mitt-rrron impact on the Parliament.

The FM was super pleased. Here was the ultimate legal boundary- all four Bills passed at the same go! In the meanwhile though, the scene had shifted to Rajya Sabha, where there was a lot disappointment because Sachin Tendulkar didn’t turn up.

“He never turns up in the other sessions. That is ok. But it should be made binding on him to turn up in March. After all, we want to discuss important issues here. What are the prospects of the Mumbai Indians winning this season, we really want to know,” said a Rajya Sabha MP.

“It’s ok, we still have Dhoni,” said Super King cleverly.

“What? Now when did he become MP? Tch, tch, I really must start reading newspapers again!”

“Idiot! I’m talking about Sakshi Dhoni making that comment on Aadhaar. Oh, we’ll raise privacy issues now. Silly point to the rescue! You want the GST, eh? We’ll catch you, alright! How? Simple! Gully, Slip and the Third man!

It’s Showtime! Sarabhais and the Markets

Dear Reader,

Hi! I resume the Tweakonomics column in the Hindu Business Line today, after a hiatus of about three months. A very, very special thank you to my Editor Raghuvir Srinivasan for thoughtfully sending in the sweetest email I ever got from the Business Line, asking me to drop whatever it is I’m busy with and get down to writing pronto! Thanks, Raghu!

So, here’ s a piece for Sarabhai fans ONLY 🙂 What happens when popular CNBC TV anchors start talking like the crazy Sarabhais?

You might want to see the article directly at http://www.thehindubusinessline.com/opinion/tweakonomics-on-rbi-fed-and-the-rate-hikes/article9591444.ece

Else, read on here, directly. Enjoy!


That the Sarabhai vs. Sarabhai Season 2 is set to make a comeback after 7 years has taken the Indian public by storm, as the RBI Governor discovered, much to his dismay on a regular, boring, nondescript working day in the RBI. Janet Yellen raised the rates and thankfully, the markets, which had already factored in the move a week earlier, did not show a knee jerk reaction. There was no major outflow from stocks, and the Governor found himself breathing a bit easy. “Let me see what news analysts are saying,” he thought, and switched on the TV.

“OMG! Janet Yellen has raised the interest rates, Mummyji!” shrieked a female spokesperson of Franklin Templeton Investment Funds, in a Monisha-esque voice. “Sahil, mein ghar chhod ke jaa rahi hoon!” Sahil, which in this case is supposed to be the Sensex, reacted positively and went up a few points. “Waaaaaaaaaaaaaa,” wailed Monisha Templeton. “Here I am thinking of leaving home, and your mood is upbeat. Now I know Indian markets don’t value me!”

“Gawd, what the hell is the matter with these folks!” thought the Guv and flipped channels to CNBC, where Lata Venkatesh was looking at the Franklin Templeton move of selling on Indian bourses. “To sell and move just because Yellen has behaved predictably is Foreign Institutionally middle-class”, she said with an upturned nose. “The least they could have done is looked at the UP story and what it means for the speed of reforms in India. What do you think, Rosesh beta?”

Udayan looked simply delighted. “I’ve written a poem on this, Momma,” he squawked. Lata didn’t look too pleased at being addressed thus, but just maintained a stoic silence. To have reacted to this would have been professionally middle-class.

“Janet Auntie has acted like a hawk/ Now the markets will listen to Momma talk!”

Lata was now simply quivering with the effort, but didn’t react to the poem.

“And here’s another one, Momma.

Us waali auntie, US waali auntie, kitna bhi kar lo rates ko hike, hike, hike/

FB par Sensex ko hi milenge like, like like!”

Deafening silence on the show.

“How is it, Momma.”

“Why don’t you take a break, Udayan,” said Anuj Indravadan Singhal, with clenched teeth, “before I break somebody’s head here. This show is called the closing bell, but any more poetry from you, and we’ll have the show closing before the markets do. And yes, Maya, let’s have a cheeseburger on the Breakfast show today!”

“I thought we’re here to discuss the heavy weight stocks, and not ourselves become heavy-weight, Indu,” said Lata, icily. “How about food for thought?”

“Here’s Maya in top form, folks! Why don’t you take a break while my heart breaks from the lack of sympathy on this show..”

“This is it! Everybody has gone complete nuts!” thought the Governor, switching off the TV as his special hotline rang softly. The ring tone was Mittrrrrron.

“Looks like politics is controlling economics, Urjit. Markets are up, Congress is down. I sometimes wonder about the NCP though. Can it pose a threat at the local level?”

“NCP? Unki ghadi kahaan kaam kar rahi hain?” said the Governor, before he’d realized he was being Dushyant. Horrified, he tried to cover up. “I mean, Sir, errr…”

But he was met by a chuckle at the other end. “You’ve been watching too much TV, Urjit!” the PM said laughingly. “Ye jo najar aate hain, Mittron, Ye toh woh hain nahi…”

 

 

Econ Mom is back!

Hi there, readers! I know I’ve been absolutely absconding on the blog front and have written simply nothing for the past 3 months. But well, I’ve been writing serious stuff for a change. And have come out with something like 10 reports on different aspects of local body elections for the State Election Commission of Maharashtra. And those too, completely formally written, not even a whiff of a joke. Its so not me, and its taken a chunk of my mind to be that serious!

Well, actually, I would have completely given up on Econ Mom, had it not been for Anagha, who’s not only my best friend, but also my blog follower and severest critic. It so happened that we met suddenly, without planning it, both of us after having dropped respective charges to respective classes and enjoying that “I am free for 50 minutes now!” mommy moment. I guess we could both recognize the slightly wild and loony look in each others’ eyes which only mothers are known to identify, and after laughing madly for a minute, got gossiping about this thing and the other.

And after a while, it came to why I’ve stopped writing. “Don’t you stop writing, Econ Mom,” said Anagha wickedly. “People may start thinking that Teenager doesn’t bother you anymore and that Hubby gives you five-star treatment at home.”

WHAT! That is a serious charge. Teenager grows more obnoxious by the day and Hubby, hmmm. The lesser said about him, the better. Nah, this won’t do! So I got down to writing the blog, pronto.

Three months of continuous election research has converted poor ole’ Econ Mom into a Political Mommy though. But I’m not complaining. It’s been exciting, using econometric methods on political databases, and it gives one a rare look into why the economics of decentralization and development just cannot work in this country. The representatives of the people are so ill-equipped to do any which developmental project at even the basic levels; hell, most of them do not even know what their own job is!

Last week. Around 5:30 p.m. The Phadke household was whirring quietly. Teenager was reading a book (I think he’s reading the Wimpy series for the 131st time or something), Hubby was browsing through newspapers, happily humming an old Geeta Dutt number. He was going wrong on the lyrics, but I was too busy to be reacting. Hmm, but it gives me ammunition for a fight later. Heehee.

I was peering quietly into my laptop, which was simply spewing up data on those candidates who had filed their nomination forms and affidavits for contesting the Pune Municipal Corporation elections. Hmm, 36% have a criminal charge against them. Of these, 30% have serious criminal charges- rape, murder, assault. 45% are Crorepatis or have patis which are Crorepatis. Interesting, of these Crorepatis, 45% have studied upto the 8th standard. My stats package gave out a negative correlation between education levels and assets, and I got worked up.

“Nonsense!” I exclaimed loudly.

 Hubby sauntered over, didn’t quite understand the SPSS screen and asked me, with evident interest, “What happened?”

“Oh, I’m so irritated, I can’t tell you. Look at these buggers who’ve got aspirations of becoming people’s representatives. “4th standard pass”, this particular entry says. And this other one is even better. It says the woman is not only B.A., but also XII pass, and also X pass and also 4th Standard. GAWD! If this woman does not understand that when asked for the education level, she has to only tick the MAX education level she cleared, tell me, what does she think she is going to do for my city? AAAAAAAAAAARRRRRGH, I am BUGGED!”

“You’re over reacting, honey. It’s ok, give that poor woman a break!”

“You know what? I would have, had there been one of this type. But there are something like 217 such completely idiotic applications and they feel they can represent ME!”

“Mom? Don’t yell. I’m getting disturbed. A child can’t even read peacefully in his own home these days!” That was Teenager, making stupid remarks, but quite obviously enjoying the “Mommy is mad at someone else” moment.  

“And you know what, young man..” I turned to Teenager, sharpening my claws for an attack, when the doorbell rang.

“I’ll get it!” said Teenager hastily, getting out of intellectual harm’s way.

Two women, wearing saris. Stoles around their neck, bearing the symbol of the political party they represent, were standing at the door. Teenager was quite taken aback at the visitors and hollered for me.

“Namaskar!” said one of the women. “I’m going to be contesting the election from this Ward and I thought I’ll come and see you all…”

“Oh! That’s so nice of you! Please do come in. You must be tired with your campaigning!” I was a bit intrigued that a candidate had come home.

She was a bit reluctant but did come in and accepted a cup of chai. “So Madam, why should we vote for you?” I asked her chirpily, even as a sharp intake of breath from Hubby told me that I was being rude.

“Ummm…” she faltered. I think she too was a bit taken aback at being asked this so openly. “Because…because, yes, because I’m going to really work for this ward!” she concluded triumphantly, with the other accompanying lady making strong, encouraging noises to egg her on.

“And, what work have you done in the past, Madam?” I asked, keeping my voice non-threatening and as even as possible.

“She has done great work!” That was the companion. “Last year, she held a vaccination camp for polio vaccination! You really should vote for her!”

“Madam, it is Amitabh Bacchhan who gets the mothers into the camp with the Do Boond Jindagi Ke campaign. You have to tell me what it is that YOU have done about it!”

The lady was scared by now. “Yes! I remember! I…I..I held a Haldi Kunku in the Sankranti festival!”

The Companion nodded vigorously. “Yes! Haldi- Kunku! And she distributed gifts and spread cheer and good will! You really should vote for her!”

By now I was upset. As in, really getting into top form.

“Madam,” I began in my most steely voice (somewhere in the background I could see Hubby making frantic movements to get me to stop), “people in this ward really want some development. You have to tell me your plans for solving the traffic issue, for segregation of wet and dry garbage. I need better streetlights and safety. I can NEVER park my car anywhere in this God forsaken ward; you have to create parking spaces (My voice had climbed up 10 decibels and I was unstoppable). You can’t be serious, Madam. Your pitch for my vote is extremely weak; unless you tell me your solutions for my problems, how do you expect me to vote for you?”

The women were looking extremely frightened by now.

Hubby pitched in helpfully. “Oh, don’t worry, Madam!” he said in a booming voice. “She says that to every candidate! She will definitely vote for you!” (Teenager was busy suppressing a giggle). I glared at Hubs.

“No, I won’t. Tell me your plans, Madam!”

Madam was looking positively scared.

“Well, actually I don’t really have any such plans..But I still want you to vote for me!”

I think even she realized how terrible that sounded. And then, the poor poor woman ventured in a low voice, “Ma’m, I really don’t know what plans to talk about. Could you advise me, what should I say to the voters?”

I must admit, this threw me off balance. I wanted to laugh out aloud. Oh, the irony of it! The candidate was asking me what she should tell other voters! But I recovered, quickly, I must say. And I informed her snootily, but quite kindly, “Madam, you need to tell people your vision for this ward. For example, there are no parking spaces. Parking cannot be planned horizontally in a growing city. Build a 14-storey parking tower in Kothrud!”

“Why 14-storey, Madam?” The Companion asked me idiotically.

“Aaaaaaaaargh, any number of storeys will do! Rather these storeys that stories!” I caught Hubby’s eye, seeking appreciation for my well-placed pun. I instead got a “Please stop talking” look.

“Tell people how you plan to have compost pits in gardens or something like that..”

“Wow, Madam!” said the candidate, suddenly full of confidence. “Bas, this is it! I am going to put in a 14-storey parking tower in Kothrud…and have compost pits!” She had the damn thing by-heart.

 “Well, now, people want an educated candidate in the ward, and someone with Community Building experience, Madam..I am a researcher with the State Election Commission and see these reports?” I waved some of my reports to them…”In these reports, we’ve created strategies for…”

Hubby and Teenager were rolling their eyes at each other.

But the women were done with me. “We really really need to leave!” They said hurriedly.

“You have to vote for me! I’m going to put up a 14-storey parking tower!” The lady told me sheepishly on her way out. The Companion nodded vigorously. “Yes, yes…lots of parking. Vote for her!”

And that was that. As I closed the door, Hubby shook his head at me. “Have you lost it, woman? Why the hell did you wave your reports at them? Gawd, you positively terrified them, Manasi..please control yourself.”

Teenager was on the phone, talking to Best Teenager Friend. “Embarassing. She keeps on and on about her election work. It’s ok petrifying people outside home. At least I can pretend I don’t know her. But at home! Can’t even claim I don’t know her!”

Just then, the doorbell rang…

“We come from the best political party in town! We’ve got you your voter slips!”

“Oh, won’t you come in?”I said icily…And Econ Mommy continues…

 —————————————————————-

 

 

 

Demonetized Shaadi: Bollywood Style!

Dear Reader,

Hi! Here’s a tweak piece on the demonetization and the immense opportunities it has created for Karan Johar 😛 This piece appeared in my column titled “Tweakonomics” in the Hindu Business Line today. You can read it at http://www.thehindubusinessline.com/opinion/black-money-and-political-parties/article9374624.ece; else read it here directly. Enjoy!

——————————————————————————–

The scene opens in Netaji’s office, where Netaji is sitting glued to the TV listening raptly to the debate on demonetisation. Such is his interest that he has consumed only seven cups of tea since the morning, instead of the usual 11. A particular piece of news makes him sit up suddenly straight and holler for Clever Guptaji.

Netaji (in a deafening noise): GUPTAJI, GUPTAJI, where are you? Come in here. ASAP!

Clever Guptaji (scared): What happened, Sir? Have you discovered yet another stash of ₹1,000 notes? I was telling you, Sir. We can’t have only ₹40 crore in cash. There’s bound to be at least another ₹50 crore somewhere. But you wouldn’t listen to me, Sir. The moment they announced that only those with a clean image and less than ₹50 crore cash would get an LS ticket for next season, you had to shoot off your mouth about how squeakily clean you are. Tch, tch, at least you could have said ₹49 crore! But just ₹40 crores! The others were looking pityingly at you, Sir. You have now really lost your image in the party.

Netaji (annoyed): GUPTAJI! Stop talking nonsense! See what they are saying here in the news! Families with marriages can get up to ₹2.5 lakh in cash.

Clever Guptaji: Errrr, so?

Netaji: So? So? Go out immediately and tell all our karyakartas and partymen to book marriage halls, gardens and lawns. And it must look like the bookings were done in September itself. Even if you get 200 of our party workers to book halls, we can get at least ₹5 crores converted into the new currency. Ha! Do this immediately, before the other parties start looking for marriage avenues.

Clever Guptaji (protesting): Sir, this is getting really, really difficult. Our party workers are tired from so much stress, Sir. The moment they see me, most run in the opposite direction.

Netaji (annoyed): What nonsense, Guptaji! What stress do they have? Getting rid of just ₹20-30 lakh should not cause any stress at all, Guptaji!

Guptaji (panicking): But Sir, please understand the field reality! Our partymen have already posed as housemaids, drivers, gardeners in the last one week. Some have even acted as construction workers, truck drivers and even mine workers, Sir.

Netaji (impressed): Wow! Mine workers!

Guptaji (wincing at the memory): The problem is that since it worked in Bihar, the idiots thought it’ll work in Mumbai as well. Anyway, we next moved them to villages where they’ve already acted as farmers, shepherds, landless labourers, shopkeepers, tailors and even as MNREGA workers. Till that indelible ink started getting used, they were working three shifts, Sir. Farmer in the morning, landless by afternoon and driver in the evening. Some dedicated old handers even switched genders. Karan Johar is now recruiting all extras exclusively from our party, Sir.

Netaji (interested): That’s extraordinary! I must ask him to endorse me when I get my LS ticket next season! But, coming back to business, if we have such talented people, it is now easy. Just book the halls, and get some really nice wedding cards printed. And tell them to go into the banks wearing nice jewellery. Half of them can be parents of brides and the other half will be the parents of grooms.

Clever Guptaji (muttering): Let me call Karan Johar. He can start casting for Demonetised Dulhaniya Le Jayenge.

Econ Mom, voter perceptions and a dash of Tennyson

“Hi, Mom! What’s for dinner?” That was Teenager, back from his badminton practice at about 8:00 p.m.

“Well,” I said enthusiastically, “there’s roti, beans, dal and carrot raita in curd!” That was me, happy and secure in my belief that I’m feeding all the right stuff to my family.

“What? Beans? Uuuuuuuuuugggggggggggghhhh. NOONE eats beans, Ma, except us. And we eat it every third day! Beans, potato, beans, brinjal, beans, capsicum, beans…?”

I looked at him speculatively. Teenager has taken this one thing from me, for sure. He can exaggerate. The boy can have a golden career as an economist, I started thinking. “The GDP growth rate of India is 7%, nnnno, its actually 7.3%, nnnnnnnnaaahhh, it’s more like 7.8%!” Yeah, he can really do a fine career out of this wonderful trait. Put him in the RBI, and your CPI will go crashing down to 4% or wherever it is that Urjit wants it to be. Put him in NITI Aayog, and you will get your growth numbers right. Put him in the Commerce Ministry, and India’s trade to world trade ratio will cross the dreaded 3% psychological benchmark in a matter of minutes! Heehee, the boy has potential, I tell you. He simply HAS to become an economist.

“I am NOT going to eat this! Give me something interesting, Mom, I’m hungry! And I’m bored” That broke my reverie and jerked me back to reality. And the reality is that teenagers have absolutely no clue or interest in any career profiles. They have only two massive sensations. One, hunger and two, boredom. Sigh.

“Beans are great for health! And …”

“Mom, why can’t you make Chhole-bhature or pasta for dinner?”

“Because the former is oily and the latter is maida. Only calories. No nutrients. Beta, dinner has to be healthy! And this week, we’ve not really had beans for about…”

“20 hours,” piped in the Hubs, with a sly smile. “This time she has really broken all records and cooked beans within the usual 24 hour deadline!”

“Oh, shut up, both of you! And boys, you can’t declare a strike at 8:00 p.m. Food is ready, I am beat and I am not going to cook anything else. It’s too late for that.”

“This is so not fair!” Teenager, indignant with rage and upset at the gastronomical disappointment. “If it’s not possible to change the menu at the last minute, then ask me earlier, Mom. Next time, ask me when you go shopping for veggies. ONLY the vegetables I approve should be bought next week. Else you’ll keep on dishing out what you feel is right…”

That’s interesting! Thought Econ Mom, surfacing suddenly in Mrs. Phadke’s kitchen. Hmmm, isn’t that exactly what the State Election Commissioner had been saying, just a couple of days ago, in our meeting at Mumbai?

“We need to take a look beyond our usual role.” The Commissioner, as always, had come well prepared with his ideas on what needs to be done. “The role of the State Election Commission of Maharashtra (SECM) is to conduct local body elections in a free, fair and transparent manner. And we do that, to the best of our capacities and abilities. But the real question is, even if the election is conducted fairly, are people really getting a fair choice to choose from?”

For the uninitiated reader, let me just put in a little bit of gyan. When the candidates file their nomination forms for an election, that is when the voters come to know what is the mix of people from which they select a people’s representative for themselves. With great foresight and I must say, with a lot of gumption, the state of Maharashtra offers a “NOTA” i.e. “None Of The Above” option for its voters, so that the voters do not have to always choose the least of all evils. They are getting a choice to say that they want none of the candidates at all. And this, is supposed to be an absolute triumph for democracy.

However, deeper thought tells you that while NOTA is great for freedom of expression, the fact that hordes of people have this expression is itself worrisome. Thus, what is happening is that candidates filing nomination do not match the expectations of the electorate. The authorities know this, but they can’t do much about it. So, they decide to give the NOTA option to the electorate so that their voice can be heard loud and clear on the day of the election. “We do NOT like these candidates.” The problem is, that it is kinda late to do anything about this, just pretty much like it was too late for me to cook a different recipe for Teenager at 8 p.m.

“The true solution is to give them a voice before the elections.” That was what the Commissioner was saying in the meeting. Is it really necessary to do that? Even while this thought hit my mind, I got the answer. “Our job is to do everything in our scope to strengthen democracy. If the electorate is not happy with the candidature, we can’t just sit around offering NOTA. NOTA might bring the issue to light, but it certainly does not resolve it.” NOTA is the dressing on the wound. The team was brainstorming on why there is the wound in the first place.

And out of that emerged one solution. Accordingly, we’re currently doing a snap poll on voter perceptions, or what the voters want. What kind of a candidate do they really want? Do they want people who are clean, or is the priority on efficiency? How many voters feel that candidates ought to be well-educated in order to be a good representative? What proportion of voters feel that women make better representatives than men? How many people are of the opinion that good candidates stay away due to criminalization of politics?

Data analysis will soon reveal voters’ preferences. This is to be done prior to the filing of nomination forms, so that the political party heads too will get a pulse of what the common man wants. This will hopefully feed into a more scientifically designed ticket distribution process, with at least a few deserving candidates getting the tickets. Rather like buying only those veggies that Teenager approves of. This will truly give voice to the electorate and make the process more participative, which is exactly where we want to go, right?

Right, but, will this work? Even if the data analysis brings out these trends, are political parties going to toe the line? Are they going to go by statistics, or by the simple chemistry of dynasty and money? We all know the answer, don’t we? Then am I doing something futile? Why should we create this data-base on voter perceptions when we know that the true users of this data, the political parties, can, but won’t use it?

I sat in my chair, post dinner, brooding over the futility issue, when Teenager started a discussion with Daddy dearest on poetry. They were both arguing about what a line in some poem meant. I was far away from the discussion, disturbed and restless. Suddenly, Teenager propped his English text in front of my eyes. “Mom? Have you ever read these lines?” he asked.

And Econ Mom found her answer. In a dog-eared literature text-book. The answer to why a scientifically designed statistical survey has to bring out voter issues, political parties be damned. “Tis better to have loved and lost”, said Alfred Lord Tennyson, “than never to have loved at all.” Bravo.

 

Kahani Contract Ki: Holmstrom’s Sholay connection!

Dear Reader,

Hi! Here’s a tweak piece arguing that the Contract Theory of the Nobel Laureate Bengt Holmstrom is but a spin-off of Sholay 🙂

This piece appeared under my column Tweakonomics in the Hindu Business Line today. You can read it at http://www.thehindubusinessline.com/opinion/columns/tweakonomics-on-nobel-prize-for-economics/article9211922.ece; else read it here directly. Cheers!

——————————————————————————————-

The modern world rests on the foundations built by contracts. Contracts, when completed, when partially honoured, when inefficiently designed, lead to different scenarios that can be used to describe situations in the world of economics and sociology. It is for “launching contract theory as a fertile field of basic research” that the Nobel Prize in Economics for 2016 has been awarded to Oliver Hart and Bengt Holmström.

Year 1975. As fate would have it, Holmström, then a professor at Kellog’s Graduate School of Management, was bored. Life had become but a bowl of cereal. Paul Samuelson had already received his Nobel for unifying static and dynamic analysis. There was Kuznets who had had the last word in growth, and Kenneth Arrow who took the system from growth to welfare. In the process, if there were any fluctuations at all, Myrdal and Hayek had already explained them. Milton Friedman had had the last word on most of stabilisation theory and Ohlin broke the trade barriers. Aaaarrrrgh! Was there anything at all left to be analysed?

Frustrated, Holmström went home and idly flipped channels on TV. Lady Luck was watching. Had Holmström decided to watch the many antics of Lucille Ball, she would not have helped him. The world would then be a different place.

A certain Cambridge economist would go on to become FM and then, against all odds, the PM of a developing country. Quite a strange contract it would be. The intense political economy situation would lead him to pen the theory of political contracts and later to a powerfully silent Nobel acceptance speech. After all, a lot rested on whether he would flip over to the next channel or not. Holmström hesitated, paused, and flipped.

An Indian movie was being aired. There were people dancing to a song. And then suddenly came dacoits. The villagers ran helter-skelter and two good-looking young men shot at the dacoits, who were forced to return to their lair to face the wrath of the Sardar. “Kitne aadmi thhey?” asked the Sardar spitefully. How interesting! This guy, who is the principal dacoit, does not really know what his agents face in the field. The main fella has an objective function of dominating the local area with the help of Kalia et al., whose main objective is to bully and snatch food from villagers. How non-optimal! A breach of contract is imminent. Hmmm. How will the principal control his little gang of agents? “Jo darr gaya, samjho marr gaya.” Ouch!

But see how the coin flips (ahem, quite literally too, in the film). There’s this cop, who too is a principal working with the agents. He is not only armless, but also pretty much blind to field issues. But he is smart. He has the objective function spelt out: “Mujhe Gabbar chahiye. Zinda.” He keeps the money part of the contract simple. Half the amount to be paid at the beginning, half once the job is completed. This thakur tests his agents’ capabilities, gives them information over a spiffing cabaret performance to complete the contract, and in the end also uses the verbal promise made by one friend to emotionally fortify the terms of the contract.

“Brilliant!” thought Holmström feverishly. Every situation is basically an outcome of a contract, wisely or unwisely written. Let me put this down into an academic paper. As the thakur would have said, “Loha garam hain. Maar do hathauda.” The rest is history.

Surgical, Purgical and Mergical Strikes in the Indian Budget

The surgical strikes carried out by the Indian Army have taken the imagination of the country by storm and rightly so.

In the meanwhile, “Surgical strike” has become the absolutely new buzzword in town. Such is the lure of the word that Chetan Bhagat has immediately decided on his new book: Surgical Strike-Point-(at)-Someone. The fellow is simply incurable.

Newshour has declared 8 weeks of Surgical Strike analysis and apparently been calling up Pakistani politicians furiously to book their dates for the period. This single-handedly has caused dizzying levels of relief for Indian politicians, who for the first time in many days, feel completely free to make idiotic statements and mini-scams without fear of being grilled by the One and Only. The PR team of the UPA scion’s Kisan Yatra is said to have collapsed amidst mingled tears of joy and relief. The Kisans though, are on the run.

B-Schools, tired with meaningless terms such as “leveraging marketing strengths to enhance ground zero” are simply overwhelmed by the discovery of such a powerful new word. Harvard Business School has now officially included a new strategy in the corporate mantras: The Strike with a capital S. Bewildered students are now being asked to “leverage marketing Strike potential to enhance ground zero”. Financial Management Journals, which hitherto described “Strike Price” as the price at which a security can be purchased due to an option, now also include the definition of the “Surgical Strike Price”. This is the price at which security can be enhanced when no options are left with us anymore.

Amidst such corporate celebrations, however, the FM has been sulking. Had he known the term before, he could have leveraged it to enhance ground zero, errr, to highlight main points of the fiscal policy. How? Well, getting the GST passed was no less than a surgical strike, was it? To trump the Opposition in LS elections so as to get the majority in the Lower House, and then to diplomatically isolate them by highlighting their attempts to stall the Bill, was just the start. And then, those incessant sessions with the State Committees to understand the sticky issues and accommodate the sensible demands. Hadn’t he too, spent sleepless nights, before the passage of the Bill?

Take the case of removing the Plan – Non Plan design of the Budget.  For the first time, the Budget will be presented, way before its usual February date, without the usual priorities as suggested by a Five Year Plan. The Budget accounts will only be classified into the Revenue and the Capital Accounts, with zero mention of the legendary Plan and Non-Plan Expenditure classification. To remove the influence of the Five Year Plan from the Budget as well as do away with a separate Railway Budget has been no mean feat; a “purgical” strike, anyone?

Hmmm. And that masterstroke of creating the Monetary Policy Committee (MPC), while at the same time allowing the Governor the autonomy of a casting vote. He had simply changed the dynamics of the game; now there would also be growth combatants together with inflation warriors within the RBI. He had successfully merged growth objectives with inflation management, and how! “Oh, I should have called it my “mergical” strike” he thought wistfully.

Of course, the decision of the MPC, in its very first policy review, to slash rates has not gone down well with all economists. Dr. Rajan, the erstwhile Governor shuddered delicately in Chicago, when quizzed about his reaction to the rate cut. “It’s more of a “splurgical” strike,” he said. “A classic case of too many cooks spoiling the Booth.”