Editorial 1/ Flying private
Editorial 2/ Holiday fever
Watch how the money goes
Fifth Column/ Russia�s painful second birth
This above all/ Healthy minds and healthy bodies
Letters to the editor

Jet Airways is the country�s largest private airline. It started commercial operations in 1993. During the intervening period, it has grown from strength to strength. It has succeeded in capturing roughly 40 per cent of the domestic market. When it started operations, its share was a measly 6.6 per cent. During the last seven years or so, Jet Airways has recorded a compound annual growth rate of over 200 per cent, and its net profits touched the staggering figure of Rs 138 crore during the year ending March 31, 2000. Of course, Jet Airways�s principal competitor is the government-owned Indian Airlines. IA has about 50 per cent of the domestic market. Its profit was roughly Rs 51 crore in 1999-2000, that is slightly more than a third of the profits recorded by Jet Airways. In addition, its profits have been fluctuating, for instance, it is expected to run up losses worth Rs 150 crore during the year ending March 31, 2001. IA cannot complain about the absence of �level playing fields� because the field slopes in its favour. Government employees are forced to travel on IA both on official tours, and also if they want to be reimbursed for their leave travels. Given the sheer size of the government, this is an extremely important advantage. IA also has the right to fly to neighbouring countries such as Thailand, although this privilege is likely to be extended to private airlines in India in the near future. Despite these advantages, the private sector airline has clearly outstripped the nationalized one. It is also important to realize that this phenomenon is not restricted to the airline industry alone. Take the steel industry and compare the profit figures of Steel Authority of India Limited and the Tata Iron and Steel Company.

Some private sector enterprises also have red ink splashed all over their profit and loss accounts. This has happened even in the airline industry, with East West Airlines going under. But when this happens, the owners bear the losses and not the taxpayer, as in the case of IA. So what is more important is that the better private sector enterprises function far more efficiently than their counterparts in the nationalized sector. From time to time, management gurus come up with explanations for the differential performance of the two sectors. These have ranged from lack of incentives for public sector managers to undue interference from government babus. There have also been attempts to change the environment under which public sector enterprises work � the so-called Navaratnas being given significantly greater functional autonomy in the hope that they could imitate the more successful private sector enterprises. It is debatable whether this experiment will succeed.

Perhaps the more important implication of this differential performance is that this provides the most important reason for large-scale privatization. The government is simply not capable of running businesses, and so should hand over control to private sector managers. Of course, once the argument is carried to its logical conclusion, it is clear that the distinction between profitable and loss-making public sector enterprises is spurious. Unfortunately, this distinction has often been made in the public debate over privatization in India. �Do not privatize, at any rate not the profitable ones,� we are often told. If a profitable public sector enterprise is handed over to private managers, they will in all probability raise profit levels. Thus, the essential difference between losing and profitable concerns is that the government will get a higher price for the latter.


An excess of political correctness is often the bane of good sense. That the Union sports minister, Ms Uma Bharti, had to beat a hasty retreat after suggesting that her ministry remain functional on Good Friday is a case in point. She covered her back with lengthy explanations meant for all who would listen. The explanations strained to make two points. Ms Bharti had not ordered a circular instructing all employees to come to work. And she had not meant to target any particular religion, since Good Friday and Baisakhi fell on the same day. She was merely trying to ensure that her office did not stop work again after the recent spate of holidays, especially in view of the imminent budget session. The gymnastics of apology seem rather a pity in view of the fact that there was nothing unreasonable in her attitude in the first place. The enormous number of public holidays in India is a serious hindrance to productivity, something the nation urgently needs to wake up to in the age of economic reform. A culture of holidays breeds a nation of laidback people. This is not desirable either.

A majority of these public holidays are religious or quasi-religious, including days of special worship, festivals and feast days, and birthdays of religious leaders and prophets. Since India is blessed with a population of many faiths, these public holidays are proportionately large in number. No one can sensibly deny the need to cut them down. A start has to be made somewhere. Religion being literally a holy word in India, there is a timid avoidance of broaching the subject at all. But there are ways to reach a balance. There are some faiths whose adherents are concentrated in certain regions. There can be holidays for them in those regions. Numbers count in a democracy. Limited holidays for the most widespread faiths and optional holidays for those less widespread could be another way of increasing working days. Ms Bharti had tried to do something in this direction. Her rapid retreat augurs ill for a concise holiday list in the near future.


The governor of the Reserve Bank of India, Bimal Jalan, has successfully demystified the credit and monetary policy announcements. As a result, there is no longer any great air of expectation regarding what the governor will or will not do at the time of his credit policy announcements.

With his February 2001 changes, the governor has exhausted his limited degree of freedom. By these changes, Jalan already brought down the bank rate to seven per cent. With inflation ranging around 6.5 per cent, any further reduction in the interest rate will not be justified. Whatever the governor did in February 2001 with regard to monetary easing has accomplished its purpose. More than anything else, it has been well coordinated with the budget announcements of reduction in administered interest rates, particularly on small savings. The liquidity in the economy is also adequate and any further increase of liquidity by the reduction of cash reserve ratio would be uncalled for, especially in the prevalent state of capital markets.

The governor�s April 2001 announcement on credit and monetary policy would, in my view, be more concerned with rectifying the systemic weaknesses that have been revealed in the light of the capital market-related irregularities, in particular, the Bank of India�s honouring the pay orders issued by the Madhavapura Mercantile Cooperative Bank with a haste worthy of a better cause. This incident has also highlighted possible weaknesses existing in clearing the system itself.

For the limited purpose of his ensuing credit policy, I think the governor will be expected to lay down guidelines on further refinements in the clearing procedures, particularly of pay orders of high value. Prudential limits related to the size of transactions that would need prior check seem to be in order.

The governor�s credit policy will also have to address many of the initiatives announced for the banking sector by the finance minister in his budget speech. These primarily involve banks extending credit for infrastructure in rural areas, especially for storage of foodgrains and agricultural products. In translating the budget intentions into reality, the governor will have his task cut out to ensure that the fragile agricultural cooperative credit structure is enabled to function more efficiently � advance credit in time and recover the same fully when due.

While on the subject of cooperatives, the governor may announce his decision with regard to the dual control of the urban cooperative banks, which have two masters now � one the registrar of cooperative societies and the other, the RBI. Co-operative banks have, however, resisted any change in this system for reasons of political nearness to the state administration and hence to the registrar of cooperative societies. The latest episode in the Madhavapura Mercantile Cooperative Bank renders it all the more essential that the RBI should exercise direct and unified control on the cooperative banking system.

In the hunt for scapegoats for the recent scandal, accusing fingers have been pointed at both the regulators, namely, the Securities and Exchange Board of India and the RBI. Sebi�s report on the events under dispute is still awaited. While no evidence has so far surfaced about the RBI�s responsibility for the latest volatility of the markets, the danger signals remain.

Banks have increased their exposure to equity stocks, especially following the provision of five per cent of advances� limit announced by the governor. This relaxation of credit is entirely justifiable on principle, considering that lack of liquidity has been one of the problems of the Indian stock market. The reform, however, calls for increased awareness on the part of the lending agencies regarding the higher risks they are taking in lending against shares. The fall in equity value leads to a direct hit on their profit and even overall viability. The governor will do well to indicate broad guidelines for banks, which undertake the necessary but �hazardous� operation of lending against equity. As in the case of foreign exchange operations, banks may require special training of their staff and an appropriate market intelligence set-up to handle equity-related lending.

The foreign exchange situation in the country seems to be on a fairly even keel and may not call for any special initiatives in the credit policy. Exports have also scored a record growth in the last year. In this context, however the new export-import policy poses before the governor a formidable list of action points. The commerce minister has also stressed the need for Indian manufacturers to upgrade their facilities. He is engaged in discussions with the finance ministry on the implementation of necessary measures to enable the attainment of higher export targets. In this context, the governor may need to calibrate his credit policy, particularly towards reducing interest rates for export operations, at the same time ensuring adequate availability of credit.

Exporters need cheaper credit to compete with their counterparts in other countries, who operate in a lower interest rate regime. Further, exporters have to be afforded production credit at lower rates to be able to supply goods on credit to their importers. Exporter-manufacturers today face a handicap. Special trade credit facilities for exporters qua exporters have also faced considerable erosion in recent years. Keeping in view the goals for export enhancement posed by the commerce minister�s exim policy, namely, to raise exports to $ 70 billion, one hopes that the governor will restructure the credit policy.

The credit policy continues to be an important barometer of the central bank�s thinking on the economy. It is imperative in the current context that Jalan�s ensuing policy should take note of the prospect of threat of a recession due to a likely decline in the global economy, particularly of the United States and Japan. He should make allowance for the likely effects of the fall in demand for the Indian products and services abroad and the need to nurse exports, particularly of software.

Equally important is the need to take into account the commerce minister�s latest relaxations on quantitative restrictions. The extent to which the markets will face a flood of imports as a result of the removal of QRs is a matter of dispute. But, there is no question that Indian manufacturers will face a difficult scenario of higher competition, both in terms of price and quality. The credit policy needs to be fashioned in a way as to provide facilities for manufacturing units that may be forced into a tight corner because of unexpectedly high competition. Non-performing assets of banks may very well increase on this account. But, that should not lead to a credit crunch.

An imaginative approach needs to be worked out for manufacturing entities, faced by a sudden decline in fortune because of competing imports. A carefully calibrated credit policy, to provide special support to such units, with credit to nurse them through their initial phase of fighting competition, as a result of QR removal, is called for. The governor can be expected to make his credit policy sufficiently proactive to handle these challenges.

The author is former governor, Reserve Bank of India


Forty years ago, on April 12 Yuri Gagarin became the first human being to go into space. Last month, the decrepit space station, Mir, plunged back into the atmosphere, incinerating among other things the photograph of a youthful Gagarin (he died in a plane crash in 1968) that hung on its wall for the past 15 years.

The symbolism was obvious � but is it Russia that has fallen, never to rise again, or only the old Soviet Union?

Many older Russians are nostalgic for the lost Soviet past, when their country was feared around the planet and there was always another sausage. For the pensioners who populate the regular pro-communist demonstrations, Gagarin has become a symbol for all that used to be right in the country, and is now wrong.

But security is not the only value any Russian aspires to. There have been huge protests in the past week in both Moscow and St Petersburg in which many thousands of people, most of them young, came to the defence of the 400 beleaguered journalists of the NTV television network. NTV, which broadcasts all over Russia, is as truthful, brave and independent as the best media anywhere in the world, and they believe it is under attack by the government.

They are probably right. NTV�s major shareholder, the giant natural-gas company, Gazprom, carried out a boardroom coup last week and then fired the network�s top managers. Gazprom insists that it only wants to sort out the network�s finances, but there are suspicions that it really wants to stop the network�s annoying habit of criticizing the government.

The NTV fight

Gazprom is a state-owned company, and most people assume that its goal is to make NTV subservient to Vladimir Putin. This suspicion is strengthened by the relentless harassment of the NTV founder, Vladimir Gusinsky (now under arrest in Spain awaiting extradition on fraud charges), and the 27 police raids over the past two years on the headquarters of Media-Most, NTV�s holding company.

So there you are: Russians cannot change their spots. Soviet tyranny is only being replaced by a different type of dictatorship. Well, no, actually.

The capitalist Russia of today is a brutal society, akin to the United States of the 1880s, where money gives the orders, the police and the courts do what they are told, and the weakest go to the wall. But this is not 1880, and today�s Russia is full of brave, well-educated people who know that they deserve better.

That golden-haloed Soviet Union of the Sixties, when Gagarin soared into space and everybody respected the Russians, was a better place than 30 years before. The prison-camp population had fallen from 20 million in the late Forties to only a few million by the Sixties, and the state had stopped the mass murder of politically suspect �elements�. There was even economic security for those who kept their heads down and their mouths shut.

New destination

But it was still a terrible place. Even when I first visited it in the early Eighties, it remained a society of petty bullies and brazen liars flaunting their little bits of power � easy enough to bear if you were visiting for a month, but perpetual misery and insult if you had to live there. The Soviet Union, down to the day it died, treated its citizens like backward children.

The new Russia ain�t great. The transition to a market economy was run by cynical apparatchiks who privatized the old state industries into their own pockets, and cost the country at least a decade of economic growth. The government is still in the hands of people who grew up under the old system. It is ugly, it is poor, and about as democratic as Chicago in the Thirties.

I�ll settle for that. This country was the model for George Orwell�s Nineteen Eighty-four only half a century ago. Now the big controversy is about whether NTV, a better television network than any of the Big Three in the US, can retain its editorial freedom. I hope it does, but I still won�t despair if it doesn�t.

Russia is a democracy. It is a shoddy democracy, where the last presidential election was even more questionable than that in the US. Money doesn�t just talk there � it yells. But that is already so much better than what went before that even Yuri Gagarin might like it. And it probably will get better, simply because most of its citizens want it to.


Which is more important, a healthy mind or a healthy body? Quite obviously, a healthy body comes first, because without it the mind would be sick. Mens sana in corpore sano � a healthy mind in a healthy body. I got musing on the subject when I was invited to inaugurate the book club of the Delhi Gymkhana. While younger members play, dance or drink away the hours, elders play bridge, ladies play rummy and accumulate fat. Needless to say, it has a bar where liquor flows like the muddy waters of the Yamuna. It also has a sizeable library facing the main club building. In the 70 years I have been a member of the club, I have played tennis and squash, swum, danced and drunk, but I have entered the library only once and that too to see what its inside looked like, so who was I to inaugurate its book club?

I was surprised at the turnout � over 200 guests packed the room next to the bar. I started with a pompous statement. �A home without books is a home in perpetual darkness,� I said. I am not sure if I had borrowed the quote or coined it myself. I went on to say that most Indian homes had at least one book � the Bhagwad Gita, Ramayana, the Holy Bible, the Quran, or, the Granth Sahib. I do not regard religious texts as books in the proper sense as most of them are not read but recited without an understanding of what they mean because they are in ancient languages.

By books I meant books on science, history, literature, nature, biographies and so on, which expand our knowledge of the world. Religious texts do not add to our information but constrict it to one subject. How is one to decide which books to buy? Over a hundred are published in India everyday in different languages. The best guide is a friend or a discerning bookworm. You may read reviews in journals, but they are not very reliable. Or scan the bestsellers lists which are even less reliable. Bookshop owners are mostly semi-literate and often the least reliable guides. Moreover, they usually want to offload books they have not been able to sell. Librarians are usually better-informed and have no vested interests in recommending books.

Books have become very expensive. People of the salaried class or who live on pensions (they form the vast majority of the members of the Gymkhana) are reluctant to spend Rs 500 to Rs 1000 on books but they don�t mind blowing up a couple of thousand rupees on drink and food in one evening. Fortunately, they also wish to be well-informed and have begun to borrow books from the library or browse around the bookshelves. It is a healthy sign. Apart from exercising their bodies, they also want to exercise their minds.

It is the rich of our country, with plenty to throw around, who have scant respect for books. Go to their marble mansions and look around. You will find chandeliers, cut-glass, premium Scotch, vintage wines, but not a bookshelf. At the most, they will have a few magazines lying on the table and perhaps a copy of the Reader�s Digest. To enjoy a book, a person has to have peace of mind. That the rich don�t have.

The biggest challenge to book-reading is TV. People are spending more and more time watching the small screen. They get news and views around the clock. Also useful information on flora and fauna. However, there are things that TV channels cannot give; only books can � for instance, the joy of reading classics, like Shakespeare�s plays and sonnets and the ecstasy of divine poetry. Even educated people who give up reading books and get hooked on to TV soon lapse into illiteracy.

Beautiful, but notmediocre

Being comely and the daughter of a well-known father is not a guarantee for a great future. On the contrary, few beautiful girls achieve anything because acclaim comes too easily to them. They don�t have the will to strive for anything. And if their parents are celebrities and rich, there is even less motivation to make it on their own. However, there are exceptions to this rule: �if beautiful, remain mediocre�. One such person I met recently is Laila Khan Rajpal. When she came to see me with a friend, I assumed she was a film star. Long dark brown hair framing her lovely face. But no sparkle, no frivolous talk that one could expect of a girl fresh in the film industry.

In the course of our conversation, I discovered that she is the daughter of Feroze Khan, the eldest of the Khans who have dominated Bollywood for some decades and his Sindhi Hindu wife, Sundri. Laila could have walked into Hindi films without any problems. She chose not to do so. She wanted to be a painter. Her parents, who noticed her fascination with colours, encouraged her to choose her own career.

After school, she went to Sophia College from where she graduated. While at college, she took lessons in painting from Professor Kunthekar and found ready outlets for her work. She wanted to paint nudes to depict the sexuality of women.

They were not easy to find in Bombay. So she proceeded to London and joined the Slade School of Arts. She saw how artists like the Austrian, Gustav Klimt, and Salvador Dali, were able to convey sexual messages through the female form. Back home, the artist who impressed her most was Anjolie Ela Menon.

Two years ago, Laila married Rohit Rajpal, a handsome Punjabi tennis player at the national level. (Hindu-Muslim marriages cause no tensions on either side.) Laila shifted to Delhi to become a member of the Rajpal joint-family. She needed her own space to paint. So she bought a flat in Mayur Vihar, across the Yamuna and converted it into a studio. She spends her days there doing her own thing.

A few days ago, Laila held her first solo exhibition at the India Habitat Centre. The chief guest was the actress, Rekha. With her father and Rekha there, there was a large turnout of Delhi�s elite gentry. The police had to keep an eye on gate-crashers. Wine and champagne flowed. I managed to extricate myself and go round the exhibits.

They were large canvases. Mostly, in artistically-broken wooden frames to highlight the theme � ancient ruins in different shades of brown to offset a human face, mostly of Meena Kumari, or, a bright red rose � presumably to show how buildings were immortal while human beings and flowers have their day and then fade out into nothingness. All the paintings were sold out within an hour.

The smile will never vanish

When tanks and rockets and the bullets
Hit me even in stone and granite,
When fuming fury in a state of fit
Turns to use the dynamite,
When frenzy, violence, vengeful wrath
The proud progeny of Satan supreme
And their kinsmen intolerance, hate
Howl and growl and loud scream
With all the self-righteous sounds,
I sit, as I did, under the Bodhi tree
Though distracted for a while
And, as is my wont, for centuries now
I quietly smile.
But oh! the hunger stalks the blighted land
And bitter chill rips the bones apart,
But oh! the children in their thousands die
And under their veils the women cry
And the powers that bred the Talibans
Now hypocritically sigh,
I must confess I am distraught,
Do I still smile?


Hardly above it all

Sir �Sunil Gavaskar has hit the nail on the head by saying that the Indian media has given too much importance to its Australian counterpart by reproducing large sections of its match reports and articles on a regular basis (�Don�t play second fiddle to biased Aussie media�, April 14). By giving undue importance to the evaluation of Indian players by Australian sports writers and commentators, both the Indian media and the players themselves, including the Indian captain, have played into their hands. The Australians are aggressive competitors and are known for the tactics they adopt both on and off the field. But the Indian captain is not completely blameless either. Ganguly should have known better than to respond to the criticism directed at him by commentators like Ian Chappell. By engaging in a verbal duel with Steve Waugh before the Test series and with Chappell during it, Ganguly only succeeded in upsetting himself and his teammates. He should have concentrated on his game instead.
Yours faithfully,
Prakash Singh, via email

State of amity

Sir � Brinda Karat has rightly pointed out that if the government is lackadaisical in putting an end to communally-motivated vandalism, it will only encourage the growth of fundamentalist and divisive forces in the country (�A message from Kanpur�, April 4). However, one cannot help contradicting her observations on Left Front rule in West Bengal.

Communal amity or hatred in a state has very little to do with the administrative abilities of its government. It has more to do with the mental make-up of its people. It is the people of West Bengal who deserve praise for their secular outlook and for having shunned communal violence. Even though the chief minister, Buddhadeb Bhattacharjee, rushed to the Nakhoda Masjid on hearing about the desecration of the Quran Sharief, he did not condemn the destruction of the Bamiyan Buddhas. Can Karat explain this contradiction?

Yours faithfully,
Susanta Kumar Biswas, Calcutta

Sir � It was up to the Muslim press to publish a photograph accompanied by the news of the burning of the Quran by the activists of the Vishwa Hindu Parishad on March 5. These were released by an international news agency. Unfortunately, a large section of the media blacked out this incident. The leaders of the sangh parivar went to the extent of denying the incident and dismissing it as a rumour. Instead of taking prompt action to nab the miscreants, some political leaders blamed the Muslims for creating trouble.

The repercussions of this heinous act were felt throughout the country, and incidents of violence were reported from states like Jammu and Kashmir. The reputation of India and Indians took a severe beating with the Muslim World League condemning the incident.

The Central government did not do anything to intervene. It was only after a high level delegation of Muslims, including members of almost all Muslim organizations, present and former members of Parliament, educationists, lawyers and journalists met the prime minister and handed over a memorandum, that there was any reaction from New Delhi. What the Vajpayee government failed to realize was that such incidents cause resentment all around.

Yours faithfully,
G. Hasnain Kaif, Bhandara

Sir � It took Kanpur more than eight years to recover from the aftermath of the 1992 riots. Even though intra-city migration of Hindus and Muslims altered the demographic and social configurations, the people of Kanpur seemed to have returned to some semblance of normalcy. But the riots that ravaged the city earlier this month suggested that the peace and amity were only superficial and that communal passions were simmering beneath the surface, ready to explode at the slightest provocation.

By the time the police and the administration intervened, the riots, accompanied by arson and looting, had already claimed many lives, mostly of Muslims. How long will it take Kanpur to recover from this incident?

Yours faithfully,
Jeetu Kewlani, Ahmedabad

Sir � In her article, Brinda Karat says, �Perhaps if West Bengal could have loaned its chief minister to Uttar Pradesh for just that one week in March, Kanpur could have avoided the terrible suffering it went through.� Karat seems to have got carried away in her praise of Buddhadeb Bhattacharjee.Very little has come of his promises of industrialization so far. Besides, incidents of communal violence have been reported from states like Midnapore. The clashes between the Trinamool Congress and the Communist Party of India (Marxist) have resulted in bloodbaths in the districts. Bhattacharjee did not intervene to put an end to the violence.

Yours faithfully,
Monojit Sanyal, Chandernagore

Elect a system first

Sir � It is a pity that despite the measures being taken by the Election Commission, polling in the country continues to be plagued by false voting, booth capturing, intimidation and violence. The situation is particularly bad in states like Bihar and West Bengal where incidents of forcible booth capturing and clashes between the supporters of rival political parties are reported quite frequently.

The reforms introduced by the former election commissioner, T.N. Seshan, helped upgrade the system and initiated the use of voter photo identity cards. But the question is: for how long will voters be deprived of their right to exercise their franchise freely and fearlessly? It would be good if we could do away with polling booths and devise some other way of securing votes.

Yours faithfully,
Ashok Singh, Calcutta

Sir � The proliferation of political parties has become a problem for the Indian electorate. The fact that parties which were opposed to one another a few days ago suddenly form alliances is an indication that very few of them have genuine ideologies. Every discontented politician either splits up the party to which he belongs or quits it to form a new one. The formation of parties like the All India Anna Dravida Munnetra Kazhagam from the Dravida Munnetra Kazhagam, and the formation of the Communist Party of India (Marxist) from the Communist Party of India are early examples of such splitting. Multiplicity of parties leads to the formation of coalitions which are usually unstable and lead to frequent elections which cost the taxpayers a lot of money.

The Constitution review committee could look into the matter. The Constitution could be amended so as to empower the EC to derecognize political parties which do not have a clear-cut political ideology. In this manner, the number of parties eligible to contest the elections can be brought down to two or three and the electorate will no longer be fractured. The party which gets elected will be able to form the government on its own strength. The parties will not be able to form opportune alliances, because that would mean disqualification and derecognition.

Yours faithfully,
C.V.K. Moorthy, via email

Sir � Cities like Delhi have witnessed large scale exodus of population from one area to another. The once congested Chandni Chowk constituency is now one of the least populated, with a population of about three lakh, while the erstwhile rural constituency of Outer Delhi now has an urban population of 30 lakh voters. The EC should be empowered to reconstitute most of the major constituencies from time to time. For example, there could be two exclusive seats for the trans-Yamuna area which accounts for more than 25 per cent of the population.

Yours faithfully,
Subhas Chandra Agrawal, Dariba

Letters to the editor should be sent to:

The Telegraph
6 Prafulla Sarkar Street
Calcutta 700 001
Email: ttedit@abpmail.com
Readers in the Northeast can write to:
Third Floor, Godrej Building,
G.S. Road, Ulubari, Guwahati 781007

Maintained by Web Development Company