Yesterday’s Failures are Today’s Successes

I agree with the RBI`s cautious approach re. FII and rupee convertibility, but I think Finance is taking a gamble as far as its thinking re. deficit. A bit of a highter deficit could be tolerated, especially if it is treated as capital investment in infrastructure but, beyond a point, it will crowd out private investments and raise interest rates. [I admit it is not happening now!]

India may learn to live with its deficit
http://www.atimes.com/atimes/South_Asia/EL16Df02.html

``...India is both worried as well as euphoric by the floods of continued FII investment at a daily average of $65.08 million. The government justifies its plan for an investment cap on FIIs as a precaution against a repeat of what led to the economic downturn in Southeast Asia in 1997. The Reserve Bank of India, the country`s central bank, advised the Finance Ministry not to raise the ceiling of FIIs beyond $1 billion, against a demand to raise it to $9 billion. Banking sources reveal that FII investment has already crossed $1 billion - or 20 percent of the portfolio investment of $5 billion this year.

Apparently, the government intends to avoid any international financial scandal to rock the investment boat while holding the key to close the tap in case of a reverse flow of capital or a run on the capital market. In addition, both the Reserve Bank of India and the Ministry of Finance are making it clear that corporate accountability and audits have to be strictly followed.

Despite a fast-growing investment climate, India is refusing the capital market and full convertibility of the rupee for the same reason, and insisting on limiting external commercial borrowings by Indian companies to $4.5 billion. This almost equals the FII investment in the country, although government economists say that the analogy is unrelated. Many Indian companies are taking advantage of the delay to impose a cap on external borrowing and raising capital abroad as fast as they can. The Bangalore-based Sterlite group, for instance, has already raised $1 billion and is planning to raise another $2 billion from the overseas market.

The decision to provide nearly $6.6 billion in annual budget support to poorly developed areas for building expressways and other infrastructure will bolster the states` budgets, but land the central government with a huge deficit to the tune of $38.4 billion, which the central government will have to raise or borrow to touch the highest India has ever invested in roads and other infrastructure. ..``

And Mr Humayun Gauhar thinks Nehru had an inferiority complex :).

http://www.nation.com.pk/daily/Dec-2003/14/EDITOR/op1.asp

``...I recently lunched with Jinnah’s biographer Professor Stanley Wolpert and asked him why in his opinion did Nehru really reject the Cabinet Mission Plan. Was it the popular view that Nehru felt that Pakistan was unviable, would soon collapse and return to the bosom of Mother India on its knees in abject surrender. Thereafter the Muslims wouldn’t raise their heads for a long time. No, said Wolpert, Nehru thought that Jinnah and his Muslims were a headache and the only cure was to cut off the head to get rid of the headache. Nehru had said as much.

He didn’t like Jinnah, to put it mildly. He wanted him out so that he could rule India unchallenged. When Mountbatten took Gandhi’s proposal to him that Jinnah be asked to become independent India’s first prime minister, Nehru remarked, “the old man has lost it.” The notion of subordination to Jinnah was anathema to him. Rather that Jinnah and his followers go their own way. There is much in what Professor Wolpert says. That Nehru disliked Mr. Jinnah intensely is no secret. The feeling was naturally reciprocated. Some would go so far as to say that Nehru felt a sense of intellectual inferiority in Jinnah’s presence. “But thank God for Pakistan,” I said to Wolpert. “Despite our mostly self-inflicted wounds, we are much better off compared to India’s Muslims. Thank you, Mr. Nehru.”

Re: # 167

I think that is Wolpert saying it... but ok.

This thread is almost at an end. I thank everyone who participted in this dicussion and kept it at a high level.
It was perhaps inevitable that the discussion would lead to an appraisal of Nehru`s legacy, even though that was not the purpose of the article - another illustration of the law of unintended consequences. There was a time, not long ago, when it was almost a blasphemy to criticise Nehru`s legacy. When Narsimha Rao and Manmohan Singh took a 180-degree turn in economic direction, both of them were at pains to deny any suggestion that they were giving up on Nehru`s socialism. Unfortunately, the pendulum has swung to the other extreme now; there is a tendency to ignore the many solid contributions of Nehru to the founding of a modern India. It`s for nothing that his `tryst with destiny` is still the most quoted speech of any Indian leader both at home and abroad by english-speaking Indians. Some posters, like rsridhar, sadna and Faruk have reminded us of his great contributions. He, along with Gandhi, was responsible for preventing the riots-inducing communal virus from spreading beyond Panjab and restoring communal peace in the country following the mayhem caused by the partition. He gave India a gold-plated constitution which can stand as a benchmark for other constitutions. He gave us forward looking institutions for a modern, secular, democratic state and brought in many worthy social reforms, such as land reforms and the Hindu Code Bill. Above all, he represented rational thinking at a time when superstition and obscurancy prevailed. It is that rational thinking that lets someone like me, who wouldn`t be today where he is but for the policies pursued by Nehru, to be able to criticise some of the same polcies.

Re : dost-mittar # 150
“ `` Nehru’s focus was not the economy, it was nation building.``
I think that you are being ungenerous to Nehruji. He had his sights set on economic planning long before India became independent. Indeed, one of the reasons that he did not accept Jinnah`s idea of a loose confederation was that it would have interfered with his economic program for an independent India.”

Well Nehru’s focus was not on increasing per capita income and other economic indicators we live by today. He focused on long term investments in Dams, nuclear power, institutions etc. that paid rich dividends many years later. The judiciary, the press, other watch dog institutions strengthened our democracy. The institutions of higher learning and research labs built a culture of excellence and transformed our society. You can call this economic planning in a sense I guess.

Regards,

Faruk

veeresh:
Thanks! Hope to see you next month:-).

www.cactuswings.com seems to have a comprehensive list of all planes currently in storage in the US. United seems to have mothballed a lot of 747-400s.

http://pro.corbis.com/search/searchFrame.asp shows photos are planes parked in the desert. Top row, 2nd from left shows 747s with engines wrapped in shrouds.

Dost Mittar # 161 . . . the private airlines in India can buy/dry lease as many aircraft as they want for domestic flights as their own commercial good sense will permit. Jet Airways is stuck with some high cost pre-9/11 lease and purchases, and have delayed picking up the Embraer small jets. Air Sahara on the other hand has capitalised with the post 9/11 low cost scenario and has picked up B-737 as well as CRJ aircraft on a variety of excellent erms.

harmau:
Are private Indian airlines like jet and sahara also prevented from buying these mothballed planes by the bureaucrats?

Ref jay #156

The mothballed fleet outside Tucson increased in size after Sep 11, 2003 when US airlines cut more than a third of their flights due to the slump in demand.

Aircraft there are maintained in two conditions. The first and more expensive one is where the engines are powered up and all systems are checked out frequently (monthly?). These planes are in a ``ready to fly`` condition. The second is where the planes are mothballed and require a bit, not a whole lot, of work to be ready to fly.

While it is true that second-hand airliners require maintenance, it is no more than the maintenance that any airliner would need once you have them in your fleet. You are also right about the planes being cut up for parts but that is not always the case.

These storage yards also are the destination when an airline goes bankrupt like Eastern, Braniff, PanAm, etc., did.

Buying used airliners is certainly a worthwhile option and one followed by PeoplExpress as I pointed out.

http://www.wompom.ca/news/AR2003SEP12.HTM

NUMBERS OF JETLINERS FLYING CREEPS HIGHER

The empty jetliners that land at the obscure desert airfields at Mojave, California, Victorville, California, or Marana, Arizona, where they undergo regularly scheduled maintenance in good economic times and are mothballed in bad, provide a clue about the fortunes of the nation`s airline industry.

A glance shows more promise than any time since the New York incidents. About 200 commercial airliners remain in storage at Mojave Airport, compared with 310 a little more than a year ago, the peak.

‘Aircraft don`t come here to die,’ said Vern Alexander, marketing director for AVTEL Services, a contract maintenance operation at Mojave that also preserves aircraft and parts for sale or reuse.

The picture is similar at a former Air Force base in Victorville, Calif., where Cold War-era F-100s, F-104s and F-106s have been supplanted by Boeing 737, 747 and 757 airliners.

‘More airliners are flying out than are coming in these days,’ said John White, vice president of Southern California Aviation at Victorville.

That trend began six months ago, when some airlines began to restore aircraft for the peak summer season.

Dost-Mittar ji # 158 . . . as with many issues related to progress in India, simple things like a link from an IndGovt website to that run by its subsidiary could and does involve vast issues of Unions . . . believe me, IR is aware of this. IRCTC is just like any other agent that the IR have, I hope you will understand this complex . . . thing?

veeresh, harimou:
I am a fan of railways in general and Indina Railways in particular. Their website is very good and informative. But it still seems to be work in progress. Their main website does not provide link for on-line booking. For that, one has to go to another sote run by Indian railway catering and tourism service. Hopefully, someone will think of adding a link on the home page of the main website.

````The great thing about Nehru is: his heart was in the right place. He strove for a democratic and secular India. Today`s India cannot hope to progress if it turns its back on secularism. I see a great threat to secularism today even as India is on its path towards material progress. `` ``(sridhar)

bravo -- this is called giving the credit where it really belongs....for modernizing India

Harimau 154,

One of the reaosns why the aircraft are parked is the heavy discounts offered by the manufacturer along with power by the hour offered by the engine manufacturer. Thses lucrative deals are not available for old aircraft.
It is unlikely that there are large number of aircraft less than 10 years old parked. In ten years, the a/c would have done neary 25,000 hours of flying and is due for a major maintenance action, typically called a D check, with a/c on ground for nearly 6 months for a B747. The same of true for engines where a large number of life limited discs will have to be changed. Typically a set of new discs or rotating elemets can cost nearly 50 percent of a new engine taking into account the discounts available for new engines.

It is a common practice for even some large airlines to remove new engines from new aircraft, dis assemble them and sell as spares. If one adds up the catelogue price of parts, it will be more than three times the price of the engine. This is another fact of life that the buyers of old aircraft have to face, as the older engines will be due for overhaul and parts to be purchased at catalogue prices. New engines, if everything goes well should run for at least 3 years with out any problems.

There are also issues regarding modification standards. In conclusion the decision to go for new aircraft by the indians is perfect, very sound and logical. The final proof is that Pakistanis are buying second hand aircraft, what more you need as proof.

Dostmitter 145

The incentive, the most significant was the credit guarantee, which made the world of difference. When the latin american countries on the capitalist model stumbled from debt crisis to debt crisis, taiwan and korea forged a head. One can only imagine what a credit guaratee by the Us govy means to the ineterst rate.

While quoting taiwan and korea, people never bother to wonder, how come these two countries in east asia are role models for the world, while all of the latin american countries with their resource richness, low population and almost complete westernisation has failed.

May be time to rered dependensia theory, Samir Amin comes to mind.