Petrol On Fire

In all fairness, the government shouldn't be blamed for policy paralysis. They have acted with such alacrity. Petrol prices were hiked by Rs 7.5 per litre as soon as Parliament went into recess. So, no shouting brigades, no loud thumping of desks, no rushing into the well of the House, no hectoring or haranguing, and no "pliss-pliss". Good only, no?

Actually, the petrol price increase raises two other issues. One, we can expect to finally see the extent of the increase pared down by Rs 2-3 per litre. The protests from allies has already started acquiring a high decibel level. By Wednesday evening, both Mamata Banerjee and Karunanidhi had voiced their displeasure over the increase. SP's Mulayam Singh Yadav, who is being courted assiduously by Congress as a counter-weight to Didi, also expressed his opposition to the price hike. Ditto for RJD's Laloo Prasad Yadav. So, once all these protests reach a crescendo, and acquire some kind of a shrill heft, we might expect to see the Congress top brass relenting and "rolling back" the hike partially. My bet? By Rs 2-3 per litre.

Even The Economic Times is betting that the price rise might finally be tempered somewhat (read here), though for a different reason. Their take: oil prices in the Singapore bulk market have been cooling off a bit.

But, ironically, BJP and CPI(M) have been misleading the public from every forum. By the way, isn't it strange how the right and left get into bed conveniently when they want to squeeze out the centre? Their beef: petrol price hike has a cascading effect and is likely to have a spiralling impact on inflation. That's a load of nonsense. Here's why. Petrol has a negligible weightage (1.09%) in the wholesale price index and its ability, therefore, to bump up headline inflation remains marginal. Also, bulk goods movement --such as essential commodities -- are moved by modes of transport that use diesel as fuel (think trucks) and not petrol.

Are there any reasons to protest against the petrol price increase? Of course, shiploads of reasons to crib about the price rise, but certainly not on account of its impact on headline inflation. The current hike comes on top of the existing inflationary pressures weighing down the middle class. And, this current episode of high inflation and inflationary expectations has its roots in the survival strategy crafted by the government in the aftermath of the 2008 global financial freeze, but let it stay on for far too long. In short, this lifeline to the economy should have been withdrawn much earlier. Plus, of course, the government has been loath to either cut down on wasteful subsidies, or re-align its expenditure strategy which is actually ending up further fuelling inflation. And, let's not even get started on this business about governance deficit. So, of course there's plenty to cry about, but not because a petrol price increase will lead to inflationary pressures as the voices from the right and left are asserting.

The government should have increased prices of diesel along with petrol prices if it really wanted to bring down the current account deficit and stabilise the rupee value. A diesel price hike might certainly be seen as inflationary, but at least these high prices would've curbed demand for the commodity. In return, it might have squeezed the import bill a bit, checked the runaway current account deficit and pulled up the falling rupee.

It is well known that fuel prices needed to be increased, and even the Reserve Bank governor's statements have alluded to the fact about how domestic fuel prices lagging international prices does lead to a build-up of inflationary expectations.

But, guess why diesel prices cannot be increased immediately, though news reports suggest the government will be meeting tomorrow to consider the possibility? The answer: it's summer in this part of the world and, with kharif sowing to begin soon (in the next 30-45 days), pols can't afford to get farmers cross about high diesel prices. In many parts of the country, farmers will need to run their pumps at full tilt, even though we've been told to expect a normal monsoon.

If there was any reason to carp, the grouse should have been why the government didn't spend on improving irrigation infrastructure in the 60 years since Independence. And guess what MPs and MLAs are mostly concerned about? Getting a red beacon on their cars!

The Gun Barrel And Bengal...

Captured Maoist Deepak (aka Venkateshwara Reddy) is apparently singing. Like a canary. This is what the controlled leaks would have us believe. And, what's interesting, the Indian Express flyer on Page One this morning (read here), has an exclusive line into what he's revealed to interrogators. He has apparently hinted at a power struggle between him and the Maoist leader Kishenji. The story also tries to plant the seeds of future discord (rather insidiously too, but in quite an amatuerish sort of way): apparently, the tip-off to the Kolkata Police seems to have been a "deliberate" leak from someone in the Maoist party.

Now, now...this is such an old and shop-worn trick. The Brits did it during the Independence struggle; so did many others, including Kolkata Police while trying to flush out Naxalites in the 1970s.

But, the story then takes another interesting turn. Deepak has re-confirmed what Kishenji had said in a May 2009 interview to Mint newspaper: that Trinamool did play a critical role in the Nandigram agitation. Kishenji, aka Koteshwar Rao, had also made another stunning revelation then which went largely unnoticed: Trinamool, it turns out, had brought to the table a cache of arms that was substantially large than what the Maoists possessed. An earlier Mocha posting (Time For Another Spring Thunder?) also had a take on it.

I was expressing my disgust and shock about this to a Kolkata resident recently and he seemed to be quite blase about the development. He felt all was fair in this battle to get the CPI(M) out of Writer's Building. Fair enough. The CPI(M) has ruled over West Bengal for 33 years and that is a recipe for disaster anywhere in the democratic world. But, the question that arises then is: will Trinamool give up its hoard of arms once it assumes power? Or, will TMC use them to return the favour to all CPI(M) members who have pursued and persecuted Mamata all these years?

The gun barrel will continue to cast its ugly shadow over Bengal for some more time.

Lessons for Maya & Co

Here’s a quiz question.

What’s the difference between a political party and a joint stock company? The logical, and common, answer is: lots. Both are structured differently, have different aims, mission statements, leadership structure, stakeholder involvement. The list can be expanded endlessly. But, that’s what is visible only on the surface. Increasingly, the distance seems to be shrinking, especially with politics becoming so competitive and political parties being forced to focus on core competencies.

Also, Mayawati’s “rainbow coalition” experiment in Uttar Pradesh seems to suggest a further convergence between the two organisational structures. Why her? According to elections observers and political experts, she used a caste combo that not only appealed to voters sick with identity politics but also capitalised on the anti-incumbency wave against the ruling Mulayam Singh government. This coalition itself constitutes a promise that she will now be duty-bound to deliver — an undertaking to put an end to identity politics and the beginning of inclusive development, irrespective of caste.

It’s here that she should look at some similar structures existing in the corporate world. In fact, to belabour the same point, politics may have something to learn from business. This newspaper has carried articles in the past about how political parties have a lot to learn from businesses, especially when it comes to handling succession planning, given that most political parties now resemble family-run enterprises. The only exception to this probably is the CPI(M). But to get back to Mayawati and her political party Bahujan Samaj Party (BSP). Her resounding victory in the UP Assembly polls now puts her squarely in a position that will require her to fulfil the glimmer of hope that she so tantalisingly displayed. Look at the challenges that she faces and the similarities with the corporate world.

First cut: Like a company draws up a strategy — which includes product, production, marketing, sales, distribution, finance — for delivering value to shareholders, Mayawati also has an umbrella agenda in place: A coalition of upper and lower castes. But it’s still not a strategy. There’s no clear, well-defined path that shows how the coalition will be achieved in its entirety. She needs to articulate a strategy that goes way beyond finding ministerial berths for upper caste representatives.

Second Stage: She now needs to put a team in place that will deliver the nuts and bolts of the strategy. She has an able Number Two who has helped bring in the votes. He has to now build a team of lieutenants who will be able to figure out what needs to be done to translate the over-arching agenda into a political reality. Only a dedicated team, with credibility at the grassroots level, will be able to make the connection between the back-rooms at party HQ and UP’s arid fields.

Third Tier: Most brilliant strategies flounder because of poor execution. Mayawati’s entire credibility quotient is currently very high and she must make sure she utilises this honeymoon period to make real, effective and sustainable changes on the ground. UP has become the dump heap in terms of development indices — it is at the bottom of the table in almost every category. If she manages to bring in some improvement, the dividends will be enormous. Therefore, key to her success will be effective execution, which also includes zero victimisation of OBCs or the other intermediate castes.

Fourth Principle: The BSP, like a smart marketing company, has understood the need for realignment of strategy and repositioning of its products. And while a good corporate always uses a combination of intuition and market research, Mayawati used only her innate sense and gut feel for analysis. All the opinion polls (supposedly scientific) — commissioned by TV channels — were wide off the mark. Mayawati has to be able to take the repositioning to its logical conclusion for her “rainbow coalition” to make any tangible sense. It’s not enough to just win this one election.

Finally, like all corporate organisations have to look after all their stakeholders, BSP also has to focus on the well-being and welfare of all its constituents.