Why today isn’t Democracy Day

Expense Account, Mint

In the days when TV dinners took on a new meaning, when the stories about alleged wrongdoing in the preparations for the Commonwealth Games (CWG) became the meal itself at dinner time in homes across the country, I heard this story. One of the scam accused walks into a swish south Delhi Chinese restaurant with some friends. As they settle down with the menu, diners at tables around him notice who he is. Some shift in discomfort. And then in welling anger. At sharing space with a person who by then, had become the face of corruption in India. Then the unprecedented happens. As a group, the other diners ask him to leave. There is a scene. The management is called in. He is booed out of the place.

The story has the feel of an urban legend (these are usually based on an untrue story which acquires a life of its own) but may be based on some truth judging by the public reaction at the opening and closing events of the CWG. Public displeasure of corruption and the corrupt is a new weapon that middle India is experimenting with tentatively.

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Ants and ignoring bad news

Expense Account, Mint

The news gets worse every day. Food inflation is in double digits and the base effect argument is now wearing thin. The forecast for prices does not look good, never mind what the periodic calming statements by those in the government say. Interest rates are rising and another rate hike is imminent. One corruption issue after another erodes the credibility of the Central government and the regional satraps already smell blood. The markets are finally shedding some of the extra points the index had gathered in the momentum of the “we’ve-kicked-the-global-slowdown” euphoria. You’re worried about your money invested in the market and wondering if you should wait before you enter the market: should I wait for it to settle a bit?

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Citibank fraud, FSDC & better banking

Expense Account, Mint

Two things happened in the last week that seem not to be connected but should be. The Citibank fraud bubbled up through the mud and more quietly the Financial Stability and Development Council (FSDC) had its first meeting. The first is a tiny example of what is wrong with the banking sector in India and the second may be a vehicle that could solve this. Though frauds can take place anywhere and in the best-regulated environments, the Citibank case points to issues other than fraud. Step back from the immediacy of Rs300 crore siphoned off by a suspected rogue employee (and we’re not really sure if that is true—how could an individual do this without even one compliance officer seeing a red flag?) and I see the problem in the banking sector as twofold. One, the government is the largest single owner of banks in India and, therefore, any reform that will shake status quo is very slow to take place. Two, the banking regulator sees its job primarily as a banker to the government with large macro goals and with the other major goal being to prevent bank failure. While this goal set may have worked well two decades ago, a third needs to be added, and very quickly, which is to protect customers from fraud and mis-selling of financial products.

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