Gandhiji, nonviolence and today

Gandhi- The great soul:

“Live as if you were to die tomorrow, learn as if you were to live forever”

-MK Gandhi

The world knows him as Mahatma. & indeed he did many great tasks which no one can forget. This country owes so many things to Mr. Gandhi which can’t be repaid. The least we can do is on this Gandhi Jayanti, let us remember our Baapu and also let us have a glimpse on his favourite weapon i.e. nonviolence.

It’s generally believed that he lived a stringent life, followed strict vegetarianism and refrained from alcoholic drinks, tobacco and even the milder stimulants like coffee and tea. His preference to simple natural remedies against illness and disease and his radical ideas on education are not so well known to the outside world and, even in India, they have not made much impact. Gandhi deliberately abstained from making these public issues and thereby confusing the people. The only exception was prohibition of intoxicating drinks which became a tool in the armoury of Satyagraha. Therefore it became a plank in the Congress program but it was well known that many an important supporter of Gandhi was privately addicted to drink and the great leader did not take undue notice of it. Even though it got into the Constitution in the form of a Directive Principle, there has been no honesty about prohibition among the Congress Governments and Congressmen in general. Gandhi’s views on language, government and economics played a considerable part in his political movements; and in the program of Khadi and Village Industries included in the Five Year Plans and in the Panchayat Raj which has recently been established, they have been accepted and implemented to some extent. 

If one does take a closer look  to all these ethics & tasks are viewed in isolation, they form an assorted and rather outmoded collection, the importance of which will shrink and fade away with time. It is only when it is realised that Gandhi was fundamentally a moral and social philosopher and that, through these items, he sought to experiment with certain far-reaching fundamental principles, of whose absolute truth he was convinced beyond all doubt, that their true significance becomes clear.

The gospel of Ahimsa:

“I know only one way-the way of nonviolence. The way of violence goes against my grain. I do not want to cultivate the power to inculcate violence.”

-MK Gandhi

The mightiest power of the world by 1950s started losing one colony after another. Where did this strength to decolonize come from? All the strength and power of the British, were no match for the joint will of the people of India. How was this Ahimsa such a powerful tool to unseat the British power from across the face of the world?

What is this Ahimsa?

Himsa, hinsa means “to hurt others wilfully, physically and mentally”. The English word “heinous” seems to have its etymological roots in the word hinsa, himsa. Ahimsa means “to not hurt others wilfully, physically and mentally.”  In other words, Ahimsa is Non Violence in thought and deed.

According to him, unfortunately for us, we are strangers to the nonviolence of the brave on a mass scale. Some even doubt the possibility of the exercise of nonviolence by groups, much less by masses of people. They restrict its exercise to exceptional individuals. Only, mankind can have no use of it if it is always reserved only for individuals. He realized us the power of nonviolence in the real sense.

La situation actuelle:

Though 67 years have been passed since his assassination, Gandhi still lives in our hearts in the forms of his beliefs, ideals, ethics and values.

Gandhi's ideals are not all lost to deaf ears, though. He still serves as a pillar of the nonviolence, living on in leaders such as South Africa's Nelson Mandela. His visions of unity, prosperity for all, and most importantly religious harmony will one day come true. India too, has not grown into a monster of all evils in the last 50 years. It stands as the leader of the computer industry, the sciences, and many other consumer industries. Under the new open markets which have emerged, India is the new dreamland for multinational corporations seeking new endeavours and markets.

The power of Ahimsa thus has had its recurrent effect not just in India, but in different parts of the world repeatedly. The Ahimsa movement which had its effectiveness in the 1930s and 1940s in India, led to the cascading effect of dismantling colonialism the world over. The equal rights for Afro-Americans, that was fought in 1960 in America, under the leadership of Martin Luther King Junior, also had nonviolence as its basic tool to fight the unequal policy of the land then. The non-violent resistance movement of solidarity in Poland following the principle of Mahatma Gandhi started the dismantling process of communism in the 70s and 80s in Eastern Europe. In South Africa, the apartheid, the apartness policy was torn apart by the non-co-operation movement again inspired by Gandhi’s Ahimsa principles.

In nutshell, Gandhiji showcased the strength of being Ahimsak. Additionally, Ahimsa has had its positive impact right through the ages not only in India but across the globe to this day and shall do so in future too whenever the hand of brutality rises. And to do that, let us collectively underpin the nonviolence so that incidents such as Syria attacks, Gaza attacks can be avoided.

Global Crisis and India

In the midst of looming global crisis, when everyone is speculating about the Indian economy, let’s have an agile glance over what’s actually happening around the globe and where it could end up.

As it happened:

Subprime crisis, Greek nonremittal act & the latest Chinese meltdown. Apart from the other major reasons, All three of them had one thing in common, ‘excessive debt’. In USA, Bear Stearns and Lehman Brothers collapse happened due to their inability to meet financial obligations as they already borrowed so much and had nothing but a bunch of CDOs which they could not sell. Whereas in case of Greece, by the spring of 2010, Greek officials knew that their public expenditure is shooting while they did not have enough revenue to meet them and so was clear that it was veering toward bankruptcy, which threatened to set off a new financial crisis. In July, the €85bn bailout package was offered in order to mitigate the situation. The most recent one is China. Their debt to GDP rate is staggering 207%. The problem with China is explained in the hilariously perfect way, “China could be in the world's greatest depression and they would still report 7%," says Gordon Chang, a China expert and author of ‘The Coming Collapse of China.’”

The Imminent Level:

Now it’s pretty clear to everyone that if China is heading to a breakdown then it’d have consequences all over the world. But the question is how it’ll affect the Indian economy. Currently India is having debt to GDP rate is around 63%, much lower than other preeminent countries. This is the basic reason why experts are bolstering the domestic economy being a fundamentally strong one. Secondly, falling crude (39.29 $/bbl) is certainly a blessing for the economy as it helps macro-economic management (both budget and fiscal) by improving macro fundamentals (inflation, fiscal deficit and current account deficit). Despite all the optimisms about the Indian market, a few days back, Sensex plunged like never before. Though it’s just a temporary fall and markets are likely to recover in the forthcoming days, only time can tell us whether this Chinese boomerang will hit the Indian economy just like the Subprime crisis did or this time India to emerge as the strongest powerhouse whenas the world is sinking!

Quick Statistics (India):

$	66.27 INR
Crude oil	39.29 $/bbl
GDP growth rate	7.5%
CA deficit	1.5%
Fiscal deficit	4%

a friend and a lesson

It was a rainy Thursday morning. The atmosphere was pleasingly fainéant and a gentle mizzle continued to play with the chilly wind. As usual, I was sitting on the couch having a Nescafe cup and The Economic Times in front of me whenas my cell phone rang. The 4'' screen showed unknown. Amidst my amazement, I received the call. It was an unfamiliar male voice on the other end. Surprisingly, he was one of my high school friends. Within the fraction of a second, old memories ran through my nous. Our bunks, tons of masti we had, number of pranks we played, shared laughter, intense fights and a lot more. School life ended and I moved to another city hence we hadn't been in touch for years.

A loud "Hey, are you there?" From him startled my cerebration right away. When that call ended, the call duration displayed was 01:02:47.

As many of us could've, he didn't wait for Sunday, the friendship day. Then why do we wait for that day to remember our friends, who are an inherent part of our lives perhaps. Why do we wait for one particular moment to arrive? Why don't we just seize it straight away and make it perfect just like he did!

Where are you?

Mother,

When I cried first time, you were there.

Now my silence is becoming deafening,

Where're you?

When I laughed first time, you were there.

Now my eyes are tired being moistened,

Where're you?

When I Walked first time, you were there.

Now my each step pushes me into duskiness,

Where're you?

When I wrote the first letter, you were there.

Now I can't depict how much I miss you,

Where're you?

When first I needed a hug, you were there.

Now my soul is jeering for that comfort,

Where're you?

More of you and less of me

 More of pillow-fights and less of fisticuffs;

More of shopping-bags and less of worry-guts.

More of storybeat and less of stanza;

More of beauty and less of makeup-extravaganza.

More of fragrance and less of tearstain;

More of rainbow and less of darkon.

More of truth and less of sorroweth;

More of smile and less of regret.

More of feelings and less of words;

More of journey and less of roads.

More of we-two and less of no-see;

More of you and less of me.

NITI Aayog: a revolutionary idea or an old wine in a new bottle?

NITI AAYOG - a MODIfied planning commission

Snapshot:

"Times have changed since the Planning Commission was created"

-Mr. Narendra Modi

Planning Commission was established by Nehruji in early 1950’s for development of the country. It was a symbol of Nehruvian Socialism and did its work at the best level by formulating 12 five year plans. However, except some initial plans, especially post ‘97 era, none of the plans achieved its target completely. Former Prime Minister of India Shri Rajiv Gandhi famously commented that Planning Commission is a “bunch of jokers”. It signified the decreasing relevance of planning commission. Finally, after 25 years, on 15th august 2014, Prime Minister Narendra Modi announced the abolishment of Planning Commission.

The Next Chapter:

Now as the era of planning commission has come to an end, it’s become important that how we begin the next chapter. It’s important not to repeat the mistakes. Experience confirms a great reluctance to modify or reject programmes when they don’t work. In the second, the emphasis on interaction with international think tanks and Indian educational and policy research institutions, though expected from a think tank for the government, would be a departure for the Indian bureaucracy. In the third, the emphasis on support systems rather than funds/subsidies is an important departure. The fourth reinforces what was said earlier about good governance and best practices and suggests that improvement in governance will be seriously pursued to improve the delivery of government social and welfare programmes. In the fifth, the recognition of weak capacity and need for “capacity building” for implementation is critical to the success of all new initiatives and many old ones.

The abolition of the Yojana Aayog and its replacement by Niti Aayog by the new government is a bold and long overdue initiative. It will help change the emphasis from projects and programmes to policy and institutions, from expenditure inputs to real outcomes through better governance and from political disputation over incremental allocations to new challenges and opportunities in a global environment. The discussion of India in a global context also reminds one of Gandhiji’s sayings:

“Let the windows of my mind be open to winds from across the world, but let me not be blown away by them.”

Like all new institutions, it will be a challenging job for NITI Aayog to fulfil its high objectives. Now only time will let us know that whether the idea of NITI Aayog is a revolutionary one or just an-old-wine-in-a-new-bottle one.

Fiscal lessons: 3 (theory of interest rate - induction)

Basically ‘debt’ means the state of owing something. Whenever the term debt is coined the first thing that comes to our mind is ‘interest rate’. The concept of interest rate goes back to thousands of years. Apparently, it’s an old idea.

Starting with the basics, interest rate simply means a few percent a year. Now the question is why it is a few percent a year? And why not something completely different? And why it is even a positive number? Or what explains that? To understand these basic questions, let’s go back to history of thought.

Eugen Von Bohm-Bewark, an Austrian economist from the 19^th century, wrote a book on theory of interest. He had given the three basic reasons of what causes interest rate. One of them was technical progress. As the economy as a whole starts knowing the easier ways in which the work can be done, the productivity level increases. So as per this concept, we can say that the interest rate is nothing but a rate at which technology is progressing. So if we say that interest rate is 5%, it means that the technical progress is speeding at 5% level.

Another was advantages of roundaboutness. It says that there’s a direct relationship between roundabout production and productivity level. There’s a simple explanation to this. That if someone asks us to do some work right now then we’d be doing it in the most direct way possible. But if we have got some more time to do it then perhaps we’d be doing it in a more roundabout manner. Like if we have got some extra time, we may analyze the whole situation first or we may look for another method or technique or something which can enhance the quality of work. In short, more the time we get to complete a work, better are the chances to get it done effectively. So may be interest rate is the measure of advantages to roundaboutness.

The third reason that he gave was time preference. The term itself suggests that rational people prefers present over future. Basically this falls into behavioral economics. It’s a psychology of humans that if we are given, let’s say, some chocolates or some confects for that matter, we’d prefer to eat them now instead of eating them in a near future with more joy. This is thoroughly explained in the Marshmallow experiments conducted by Zimbardo. It says that even if we know that we’d be enjoying more advantages by consuming the thing in future than in present, we have a tendency to be impulsive and we’d rather prefer to consume it straight away. So may be interest rate is the rate of time preference. So if we say that interest rate is 7%, it means that people are 7% happier to get something now to get in the future.

Fiscal lessons: 2 (Risk management in insurance & the AIG saga)

BACKGROUND:

The insurance sector has been immersed in a permanent updating process, fostering the changes needed to adapt both to the new economic environments and to the growing levels of safety, transparency and effectiveness which are increasingly being demanded by financial markets and citizens. Their growingly frequent uncertainty necessarily leads supervisors and companies to look for higher levels of safety through new approaches to solvency, supervision and risk management procedures.

Basically ‘insurance’ is all about ‘risk pooling’. Where many people invest their money to get protection against the future loss. Insurance companies are in the business of taking risks. Worldwide these companies write policies that deal with specific risks, and in many cases, even underwrite exotic risks. As a direct corollary, therefore, insurance companies should be good at managing their own risks. However the truth is a little far from that! Most insurance companies are very good at assessing insurance risks but are not very good at setting up structures in their own home to manage their own operating and business risks. And failure to manage such risks can be proved fatal to their business.

AIG SAGA:

AIG stands for American International Group. It was founded in 1919 in Shanghai. Today, AIG is the biggest insurance company in the world. But something went wrong during the USA subprime crisis (2007-08) that eventually led to the situation where Federal government had to come to the rescue in bailing out this insurance giant. The primary reason for this debacle was the failure of independence assumption under their risk modeling. The company was exposed to real estate risk. The reason why their risk model failed was they assumed that house prices can never go down. But ironically what actually happened was house prices fell everywhere in the country. They were taking risk,

1. by insuring against defaults on companies whose credit depended on the real estate market.

2. by directly investing in the housing sector.

So because of the collapse of housing sector in USA, AIG was about to fail. At that time the federal government had to bail out the company by pouring in $182 billion through TARP (Troubled Assets Relief Program). This was a massive amount so some people protested it but this was necessary step that the fed had to take as AIG, being such a large corporation, was linked to lot of other financial institutions, banks and other insurance companies as well. Now they all were subject to failure as their investments stuck too! So it was feared that this may lead to the destruction of the whole financial system. And that is why Fed took this outrageous decision.

So this is how AIG failed in managing the risk and almost went bankrupt. This case was also a deterrent example to the other corporations.

NEW PARADIGM:

“Change is the end result of all true learning”-- Aristotle

Recovering from such a big disaster could not be easy. But AIG did that. in fact it did that so well that today, AIG is a hot stock again in the market. After this incident, now--Insurance companies are no longer looking for single investment option. Also they had diversified their portfolio into different investment alternatives available. besides, Firms are looking to not only reduce the operational risk of the firm, but to make sure that they are only accepting non‐operational risks in the context of their total portfolios.