SEBI in India – It is right to be wrong

Thomas Hobbes' theory of justice depends on certain observations on human nature – doubting our ability to come to some agreement about what is just.  I agree.  Indians must give up the search for the Summum Bonum – Cicero’s concept of the highest political good or perfect justice.

An Indian company, DLF Ltd, was found guilty on Oct 13 2014, of not disclosing complete information in its Initial Public Offering (IPO) of 2007. Great. It takes Securities and Exchange Board of India (SEBI) seven years to figure this.  Let us now look at the punishment meted out to the company – The Company and some of the key staff are barred from accessing capital markets for three years.

In other words, a person walks down to the bank and fraudulently withdraws money from an account.  The punishment for this person is that he must not enter a bank for three years!  Is this not great?  I mean wow!  What a relief!!

The stock lost 30% the next day.  Essentially SEBI punished the investors and not the company.  What kind of a twisted justice is this?

The above incident clearly shows the lacuna in the concept of justice in India.  Organizations and institutions are more happy to be seen to be delivering justice THAN ACTUALLY DELIVERING JUSTICE.

The Law commission is currently in the process of repealing some 300+ antique laws in India.  Come On!  Is this the best that one can do with his / her time? There is no dearth of laws in India - what we need is modern laws and their implementation. Let us say all these 350+ laws are repealed – will it make an iota of difference in our lives?  The average citizen becomes aware of these laws only when the media reports that they will be repealed!

In the concept of Justice as a natural law, Justice is similar to the laws of physics - Newton's law of Motion requires that for every action, there must be an equal and opposite reaction.  Well justice too requires that defaulting individuals / groups to get what they actually deserve.

Theories of retributive justice are concerned with punishment for wrongdoing, and need to answer three questions:

Why should we punish?

Punishment is the infliction of an unpleasant but appropriate penalty upon an individual or a group by law enforcement agencies in response to behavior that an authority found to be in violation of existing laws.

Who should be punished?

The answer here is clear – we punish the company, the lead managers, and all those associated with concealing the material information

What punishment should they receive?

Ah! Here lies the rub!  The answer here lies in the concept of restorative justice.  Restorative justice focuses on the needs of victims and offenders, instead of satisfying the law.  Offenders are forced to take responsibility for their actions and this type of justice shows the highest rate of victim satisfaction.  This concept was eulogized in the 1972 Indian Film “Dushman”

Lady Justice depicts justice as equipped with three symbols: a sword symbolizing the court's coercive power; a human scale weighing competing claims in each hand; and a blindfold indicating impartiality.  Well, the coercive power it is, but the poisoned blade found its way to the wrong person - the investors.

Talking of poisoned blades reminds me of Hamlet and Shakespeare. “This above all: to thine own self be true.”   I wish India wakes up.  Is this what our freedom fighters dreamt of – A hypocritical India?

But, there are no fighters here now, are they? Do you know why?

“Conscience doth make cowards of us all.”

© Nitesh Kotecha

The Prevention Of Politics As A Career Act

I dream of a world where every country has its own act that briefly conforms to the above utopian law.

Why does a person want to be at the service of others?  I have always believed that there are personal motivations involved ESPECIALLY when a person wants to work for others!

Let us look at all the social service organizations that have brand names that span across countries.  The people involved in the committees fight bitter battles and speak with a fisherwoman’s tongue.  The other activities include over-invoicing costs and pocketing the difference in cash, hosting dinners and personal grandiosity as displayed in photographs of local and regional newspapers.

Let us look at this a bit more honestly and a little less cynically.  Let us assume that President Obama had announced in 2008 that he would be President for four years only and that he would not contest elections in 2012.  What are the odds that President Obama would have done a much better job than what he has done?  I believe that he would have excelled.  The thought of contesting elections in 2012 would have never entered his mind and he would have been more concerned about leaving a legacy.

The Indian politicians are a powerful lot.  Many Indians pride themselves when they know a politician to be a friend.  Many Indians want to be that – a politician and supposedly spend a life worrying about the people of the country.  What rubbish!

To have a majority of the people wanting to be politicians is an insult to a country and its politics.

A politician must spend no more than 10 years of his life in politics.  He/ She must then retire and try to earn a living like the rest of the country does.  I think a decade of self less service is good enough.  Why would one give more time to this?

Countries stink because the same politicians have been stinking the country for too long.

© Nitesh Kotecha

The RBI does it again

The Reserve Bank of India has once again raised the interest rates. Yet another round of an increase in the lending rate for reasons not entirely attributable to money supply. 

The WSJ reports 

MUMBAI – India's central bank raised its key lending rate by 0.25 percentage point Tuesday, but hinted at an imminent end to its tightening cycle, saying it is unlikely to increase the rate again at its December meeting as inflation should be easing by then. 

"Notwithstanding current rates of inflation persisting till November, the likelihood of a rate action in the December mid-quarter review is relatively low," the Reserve Bank of India said in its mid-year monetary policy review after raising the repurchase rate to 8.50%. "Beyond that, if the inflation trajectory confirms to projections, further rate hikes may not be warranted." 

The RBI has raised rates 13 times in the past 19 months but has failed to take the sting out of inflation, which accelerated at 9.72% in September. A poll of 15 economists after the rate decision showed all of them now expect the RBI to hold steady until March. 

Based on the current economic scenario, Tuesday's rate move could be the last in the policy tightening cycle, RBI Deputy Governor Subir Gokarn said. 

The RBI's dovish comments come as growth in Asia's third-largest economy is showing clear signs of a slowdown, crimped by the aggressive monetary tightening and deepening economic troubles in advanced nations.

Still, the rate increase puts India at odds with the rest of Asia, where most central banks have stayed on hold during a period of renewed economic turbulence, while a few have even begun to ease policy.

This is supposedly the last round of increase. Well, it’s not surprising, considering that all macro-economic indicators are pointing towards a slow growth.

Food inflation has been the enemy of the year 2011. The government can do well by clearing the supply bottlenecks. The complete mismanagement of crops and their storage by the Government is brushed under the carpet. We now have a country where food shortage and food surplus go together. There are Indians who go hungry and there are Government storages where food is allowed to rot.

The Honorable Supreme Court of India directed the Government to give the grains for free to the poor. Our erudite and learned Prime Minister and his even more erudite and learned Agriculture and Food Minister objected to this suggestion by the Supreme Court.

The message to the Honorable Supreme Court by the Prime Minister was “Don’t try to run the Government” - a very assertive response from a Prime Minister who heads a Government with more scams than ever in India’s history.


Copyright - Nitesh Kotecha-