Sunday, 11 June 2017

When economics is hostage to politics



The Beef Politics


The Beef controversy has been raging hot in India since the nationalist Hindutva protagonist BJP has come to power. In fact in the run up to the general election the popular cry went up in the air chanting for Narendra Modi to replace a poodle PM who allowed himself to be chained to the dynastic mayhem of corruption that piled one upon the other exploding at UPA’s face and rocked the nation to its foundation.  The liberals who mostly received favours from the UPA dispensation panicked in their cosy comforts; Nobel Laureate Amartya Sen, who in his prime career had no time for India’s welfare economics, launched himself head-on into the damage-control exercise to bail out his friend Manmohan Singh. Apart from his large stake and largess at the Nalanda International University as the Acharya (Chancellor), his pet theory of cash hand-outs as endowment-entitlements found expression in terms of hefty dole out schemes which were announced by the UPA under Sonia Gandhi’s National Advisory Council in which Prof. Sen had his alter ego Jean Dreze tucked in.  The unstrapped welfarist measures failed to redeem Manmohan Singh’s much-touted image as an economist; the topsy-turvy economy instead of being on an even-keel drifted farther away and deeper at sea.  The current account deficit was soaring high, GDP was falling via declining IIP and exports, and the Inflation spiralled out of control. The vital parameters of the patient sent the spin doctors like Chidambaram, Kaushik Basu, Alluwaliah etc., running helter-skelter to book ICU-- such as Rs.2kg rice when the patient had bloated tummy and was unable to digest it! As the election days drew close to closer Prof. Sen Kangaroo-hopped TV studios to pontificate sermons from there. Anchors in their ‘presstitute’ mentality were more than willing to provide free space for future quid pro quo. Unabashedly Sen shopped for votes on behalf of his friend Manmohan Singh, repeating every time a self-demeaning pontifical prophesy that Modi as PM would be a ‘disaster’ for India.  This Nalanda-obsessed Nobel Laureate stooped low and lectured on growth economics that was not his domain as Prof. Jagdish Bhagwati pointed out. Curiously, West Bengal
CM Mamata Banerjee had rushed to Delhi to plead with Singh to do something to douse the push-pull inflation. She was however lectured on growth model; Singh insisted that the ruling double-digit inflation was necessary to kick-start growth and arrest the rising unemployment. ‘Secularism’ as UPA’s muse  was injected into this modular economics. Singh insisted, “Muslims should have a larger share of the nation’s wealth”.  This became UPA’s income redistribution policy statement to turn upside down the Kaldor-Hicks welfare ordinal principle. Maybe it respected the ‘Scitovsky paradox’ in terms of Sen’s crazy campaign of minority-ism. I recall economist (now Niti Ayog member) Bibek Debroy who termed Singh’s double-digit growth-driver as ‘stupid economics’.  He was spot on. Prof Samuelson thought that about 2% inflation was a growth-trigger.

Therefore when Narendra Modi as an outsider to the Lutyens’ exclusivity donned PM’s mantle, it was but natural that the ramshackle Congress party marginalized post the election had to mount attack on Mr. Modi from day 1. Fake-secular media and ‘liberal-intellectuals’—who preach ‘tolerance’ but are extremely intolerant of contrary opinions—joined in the anti-Modi rant and chorus. The gang dropped all canons of ethics and mocked the PM even on his personal tragedy.  RSS’s Hindutva nationalism became the punching bag. Laughably some alluded to Tagore’s view of nationalism to argue that the nation-state concept was denounced by him. But can anyone vouch if Tagore threw down his poems on nationalism in a bundle on fire? Whose poem do we sing as our national anthem? And who discarded the Knighthood? However the anti-India brigade working to an agenda set by their foreign masters, who happen to control many NGOs in India, is out to de-stabilize the Modi govt for the simple reason that their holistic existence in academia to politics is on the way out. Therefore these self-loathing ‘Indians’ are inciting students through their agent-provocateurs like Kanahiya Kumar, Umar Khalid etc., to seek India’s ‘annihilation’; whether in the south or in Kashmir they have ramified their nefarious design for breakup of the Indian nation-state. Congressmen Aiyar, Khurshid or Digvijay Singh   or activists in the name of peace—the so-called peaceniks embrace the Kashmiri Separatists and the Jihadists.

The bizarre narrative goes like this. Modi is a dictator and fascist. His Army Chief Bipin Rawat is reincarnate Col Dyer of the imperialist Raj. An innovative intellectual finds out ‘chilling similarities’ between the Indian Army Chief justifying the ingenious use of ‘human shield’  out of a stone-pelter; despite being free to fire his weapon at the violent mob which surrounded the civilians with threats to their lives,  the Army Major got hold of a rogue stone-thrower and tied him to his jeep as a human shield in order to arrange for the safe passage of election officials ; the stone-pelters could have been felled by volleys of bullets or pressed under the rolling tanks (recall Tiananmen square).  But his purpose was to save human lives. Yet this lumpen Chatterjee finds ‘chilling similarities’  between justifications for saving lives  and Dyer’s racist  perversions in the 1919 massacre of unarmed children and women. What a galling shame that the oppositional politics has infected India with anti-Modi hatred and perverse narrative. The foreign media is of course providing the   wherewithal. Some write for Washington Post, some for Wall Street Journal, some for Daily Telegraph, some for the Economist, some for The Wire Magazine, so on and so forth.  As mentioned the Congress set off its launch pad from day 1 when PM Modi injected life and dynamism into the moribund foreign policy before he assumed office by inviting all SAARC heads including Pakistan’s PM Nawaz Sharif to his swearing-in ceremony. Since then as the days rolled by, came the Congress-backed intellectuals such as Nehru’s niece Nayantara Shagal leading a band of award-returnees to return their awards on issues unrelated to the Modi administration. They would pounce on any excuses to assail the PM and denigrate India’s image in their perverse rant. UPA’s ex-Finance Minister P Chidambaram in his height of impropriety ridiculed Mr. Modi, that too outside of India, on his understanding of economics as if the same could be written down in its entirety on the reverse-side of a ‘postage-stamp’. Chidambaram, the inventor of Participatory Notes, (PN) –a mechanism that facilitated Hawala transactions and money laundering of which his son now stands accused, inter alia other charges –launched    a tirade against the revolutionary Demonetization. It was shameful that Chidambaram ran from pillar to post and resorted to deception and polemics to sound convincing, but the facts were to the contrary. The actual data revealed the situation post demonetization as follows:-

·         2/3rds of liquid cash to the banking system that was gasping under a huge NPA of 6L Cr
·         Banks got a surge of deposits from 18 L people
·         Transparency of digital transactions rose by 3 times
·         95 Lakh new tax payers and rise in e-filing
·         Despite doomsayers GDP touched 7% against the projection of 6.5%

Yet Chidabaram and the sceptics would not dismount from their anti-demonetization rant. When his leader, who was passed off by the Congress as the most honest and a world-famed economist numero uno, mounted a scathing attack saying demonetization reflected “a monumental mistake, organised loot and illegal plunder”, the nefarious agenda behind such a statement must be understood. The actual reasons became obvious later on. They all had a stake in corruption. For example Chidamabaram as FM was involved in the conflict of interest case related to his son. What a murkier thing happened. His son escaped to London which unfortunately is a safe haven and home to a criminal like Vijay Mallaya whom the UPA pampered.  Mallaya’s Rs. 9,000cr embezzlement from banks tells another sordid tale about UPA’s wonder boy, black-swan Raghu Ram Rajan who was sitting duck on Rs.6LCr NPA under his RBI chairmanship. No wonder Congress got panicky over the end of Rajan’s tenure lest the skeletons of its financial scams would come out of the cupboard. No wonder    Bengal CM Mamata Banerjee poured venom probably to hide a different agenda. She even charged sarcastically that farmers would either die of starvation or would be forced to eat plastic, mocking at plastic digital card. Yet the Bengal farmers produced record crop. India as a whole has produced record agricultural yields. The abundance in availability of vegetables and fruits in the market is not spooky. The demonetization squeezed out excess cash/black money to have left the hoarders with little manipulative capacity to engage in hoarding.   Sure no politician, not even the bold Indira Gandhi, could ever have dreamed of choking off the rising economy of 85% cash currency—that too all in high denomination—in a country so widely spread across its landmass, so diverse and so deeply tied down to cash transactions., unless  he planned it out and had it up his sleeve more than a year ago.  And there are indications to support this conjecture. The paradigm shift away from the cash-flow economy to a corruption-free digital economy has been the fundamental thrust of the Modinomics from the day one. Not issues related to economics, not the gargantuan scams but the lip-service to Nehruvian secularism was all that mattered for the venal intellectual class.    As all the diabolical plots of oppositional politics fizzled out one after the other the subplot thickened. The whipped up propaganda about the fake imagery of Muslim ‘oppression’ having failed as a ploy, beef as an identity of Islam becomes the best trope to provoke the ire of the riot-happy subaltern Muslim hoi poloi against the govt and draw west’s opprobrium in its aftermath; the western media gleefully picks it up through their paid Indian agents to gun for Hinduism and BJP’s Hindutva politics. India not belonging to the Abrahamic past is a happy hunting ground, a greener pastures, for pontifical proselytizing.

 An interesting anecdote has it that the last Mughal emperor Bahadur Shah Zafar rebuked the Muslim soldiers who wanted to celebrate their victory (temporary though) in 1857 with beef feast and they wanted to slaughter cows in Red Ford. Retorted the emperor, when was Islam reduced to beef-eating? But then the Gandhi-Nehru legacy has changed all that narrative. Ask Mamata Banerjee, a Hindu Brahmin (?). She attends Ifthar party and defends beef eating as an Islamic ritual. Some Hindu fringe elements are also to blame for walking into the trap, mischievously laid out by the agent provocateurs. The 50-year-old man, Mohammad Akhlaq, was lynched at Dadri, UP for eating beef. Undeniably the lynching was strongly condemnable. But why blame the govt for it? Yet the anti-Modi waves churned and churned. Bengal poets and politicians across the concocted secular spectrum threw beef parties in open streets to settle score with Hindus! To what a repulsive form the Nehruvian secularism has churned and shaped at the hands of the Congress-Left-liberal axis!   A band of Congress butchers in Kerala slaughtered calves/heifers in open streets to showcase their ‘secular’ protest against the Modi Govt’s cattle market regulation Order. Two things have emerged. The opposition wants unregulated slaughter for beef production and second, it suits their agenda of secularism that is equivalent to Islamic pandering for votes. In India economics is mingled and muddled with, and bogged down in politics. It stands to reason therefore that the economics of demonetization to flush out primarily black money was severely lambasted by the political parties, Mamata Banerjee of the regional scam-tainted TMC leading the charge. The current RBI Guv Urjit Patel has come out with a report that private consumption actually accelerated (Q3) when demonetization was the most intense and remained resilient in Q4. He added further that the slowdown set in the first quarter of 2016-17—well ahead of demonetization. Should not an elected Chief Minister who challenges the PM on every issue apologise to the people for scare-mongering them of famine and starvation? Such is the height of irresponsible oppositional politics that interferes with pure economics which is beyond the comprehension of these vested leaders. Although the Constitution enjoins upon the govt to seek to preserve and prohibit ‘the slaughter, of cows and calves and other milch and draught cattle’, the Islamic secularism gets precedence over everything else. Even assuming away the Constitutional mandate, the axiological standpoint of welfare economics would not justify the raison detre of unregulated cattle market that secularists unabashedly empathize with on employment plea. Illegal trade in slaughter of cattle results in an imagery of inhumane cruelty, an increase of  social tension, besides unacceptable pollution.

According to a report Kolkata Municipal Corporation installed a modern abattoir with a capacity to stock 1200 cattle of large size. Currently it slaughtered 800 bovine cattle on daily basis to cater to the market. But it faces closure now because of drying supply from various other states. Kolkata has other slaughterhouses in Metiabruz and Rajabazar. There might have been permitted myriad illegal slaughter houses by the political dispensations in the state ruled by the Left-front and now the TMC. Beef parties and Iftahar parties are organised with great fanfare to harvest weird secularism.  The ‘secular’ media too, does not fall behind to flaunt a whopping Rs.26k cr beef exports to financially terrorize the Central govt into non-action against the illegal beef trade.  India in fact is the largest cattle producer country. As per the 2012 data India, Brazil and China in that order happened to be the three largest beef producing countries which together account for half the world’s beef cattle killed.  The question gets asked is: should India become a beef republic as the largest beef producer cum exporter to emulate the example of a banana republic and thereby contribute to unmitigated pollution? Can our secularism be as abjectly fundamentalist and demeaning as to gloss over addressing this ethical question?  Should we as the inheritors of an ancient civilization not get our dander up at the reckless cruelty to large animals? Should we degrade ourselves and retrograde to barbaric cruelty and brutal animalism that Amrtya Sen’s iconic Kerala Model has recently demonstrated? The youth Congress supporters showcased Congress’s ugliest fangs of anti-Modi vengeance by slaughtering mute calves on streets. That in the Hindu-majority India such an abject display of minority mayhem can take place to rub salt in on Hindu sentiment  is in itself an admission that Muslim radicalization of Kerala has been complete. Frederick Forsyth’s researched best-seller, The Afghan, is as such no exaggeration.     Are we to replicate India’s darkest medieval period,  or  should modern India proud of  ‘scientific temper’ and humane qualities allow itself to be convulsed by unfettered animal cruelty just because of lumpen politics indulged in by those who have to willy nilly stay in the reckoning? Therefore we need to control the beef trade and more so, the illegal one.

Let us move away from plain semantics to concentrate on data analysis and economic behaviours. The ignoramuses of the public and in the media must be told that old system of Gold Standard broke down because of the craze for gold rush that every nation sought after by only going in for ‘exports’. Tautologically speaking, spending is also income! Hence the craze for ‘exports’ without imports resulted in the collapse of the system. The system of balance is present whether in microcosm or in the macrocosm. In The Theory of Everything Stephen Hawking elucidates that stars stay in position from collapsing till they balance the gravitational attraction by the heat from the nuclear reaction; it heats up the hydrogen gas and increases the pressure inside to just balance the gravitational attraction from collapse, in the same way as can be seen in the analogy of a gas balloon staying in the air.

Should India discard the theory of balance and go on producing, consuming and exporting beef unfettered or is it time for regulation?  Let’s take a position with respect to some statistical data tabulated below to depict the reality. Can beef cattle be an index of development? Incidentally in the modern era economic growth is not open-ended. It has to take care of the environment, and the ecological balance.

Interestingly, “Chinese culture has traditionally prized meat as a sign of prosperity, but as the animal industry’s devastating toll on the environment becomes more apparent, the Eastern nation has started to warm up to a plant-based diet. Tainted drinking water and polluted air are just some of the dangerous eco-dilemmas the Chinese meat industry has recently been criticized for compromising the peoples’ health. According to Public Radio International, only four to five percent of Chinese citizens have adopted a meat-free lifestyle, but at more than 50 million people, that number surpasses the United States' meat-free population. The green effort is aided by the growing number of veggie options at restaurants that cater to a mainstream crowd, such as pizza and faux meat.”

“PRI interviewed Chinese pop star Long Kuan, who helped kickstart the country’s vegan movement. Kuan told the news source that the younger generation is more conscious of the environment as well as the well-being of animals, and she says that with the ever-expanding number of vegan options, ranging from steak to pizza to fish, giving up animal products is easier than ever.” Unfortunately such a reformist movement in India is a herculean task because of its lawless democracy that allows political parties to harvest votes in the name of religions. Gau Raksha movement on a religious overtone, which does not concern itself with other bovine meat, is counter-productive and gives fodder to secularists and Islamic fundamentalists. Majority Indians are not beef eaters; yet according to the National Sample Survey Office (NSSO), one out of 13 Indians currently eats  beef or buffalo meat!

 In the following table1 data as available on the net are collated for four countries mentioned; for each country the first row indicates beef cattle kept and the second row indicates beef cattle killed. Third row shows the percentile ratio for relative comparison (one may call it national cruelty ratio!).

                                                Table : 1 :

Yr/country
2008
2009
2010
2011
2012

INDIA
364
371
378
383
387


60
61
62
62
63


16.48
16.44
16.40
16.19
16.28

BRAZIL
224
229
234
240
246


49
49
49
49
50


21.88
21.40
20.94
20.42
20.33

China
151
149
147
146
145


45
43
42
41
41


29.80
28.86
28.57
28.08
28.28

USA
124
131
130
129
126


36
36
36
36
35


29.03
27.48
27.69
27.91
27.78
















What does table1 indicate? That India, Brazil and China keep and kill world’s largest beef cattle and that they together cater for more than world’s half the output in both the verticals. 

                                             Table : 2 :

GDP In


Beef
Ratio   of
Ratio of
Trillion $
2012
2015
Cattle Killed in Million
Beef to GDP-2012
Beef to GDP-2015
INDIA
1.828
2.089
63.00
34.46
30.16
CHINA
8.561
11.065
41.00
4.79
3.71
BRAZIL
2.465
1.804
50.00
20.28
27.72
USA
16.155
18.037
35.00
2.17
1.94
RUSSIA
2.17
1.366
7.00
3.23
5.12


Table 2 shows an unsatisfactory scenario for India. Cattle beef to GDP ratio is hovering between 34 and 30 (data on beef cattle for 2015 being not available) whereas for China it ranges between 5 and 3 and for the US it is around 2. If the trend continues, as it should –the picture reveals a real shame for India; though we lack current data,  should we prosper on cattle beef production to turn the clock back on our overwhelming dependence on agriculture farming and earn the moniker a ‘cattle-class nation’ analogous to a banana republic same as Brazil? So then what should we do?   Let’s be ready for a further shock:
                                             Table: 3:
Country
Population in million
Beef Cattle killed in million
Ratio of Beef Cattle killed to population

2015
  2012
Percentile
India
1311
    63
75.44
USA
  321
    35
10.90
China
1371
     41
 2.99
Brazil
  207
    50
24.15

Table3.

Source: World Bank Open Data: http://data.worldbank.org/country                                US Dept of Agriculture : www.usda.fas.gov
https://qz.com/643433/all-you-wanted-to-know-about-cows-in-india-in-charts/

 In India out of 1.311 billion population a maximum 6.37% (roughly 83.48 million) are beef-eaters (Hindu: 12.56; Muslim: 63.49; Christian: 6.54; others: 0.89) whereas the other three countries are overwhelmingly beef consuming nations. Normalizing the population @6.37% for beef eating Indian public, table 3 indicates a grotesque yearly figure as a rough guide—a staggering scenario of 75 beef cattle killed per 100 Indians. In stark contrast for beef consuming nations roughly 11 beef cattle are killed per 100 Americans, 3 beef cattle per 100 in China and 25 per 100 Brazilians. Should India exceed Brazil 3 times in beef production per 100 people? This is absolutely a shameless cruelty apart from fact that the country stays stuck in agriculture.  India perennially suffers from the agriculture-
dependency syndrome. The political parties have a stake in vote-bank politics. They capture an imagery of farmers’ poverty and suicide as their political capital to garner votes come the election time.  For them India has to be kept hostage to agricultural farming and cattle politics, which  as things stand, additionally serves ‘secularism’.  But cutting back on beef cattle will balance the economy in favour of an Industrial shift and secondly, milk and milk products at cheaper rates will be available from an increased livestock of dairy cattle that should cater for better health care rather than present the picture of children with bloated stomach and, thirdly the reduction of beef cattle ratio will result in a better ecosystem from the reduced pollution. A little correction: in case the vegan Chinese citizens of 50 million are counted out, the figure of China goes up above 3 beef cattle per 100 persons. And for India to achieve USA’s bar she should cut it back to 10 million beef cattle per year –a nightmarish absurdity for India’s venal, secular and liberal intellectuals or, the vested political class!

India is the world’s fifth largest beef-eater, and consumption has been rising steadily over the past few years. Muslims form the bulk of beef consumers. As per the USDA data India exported 2 million tonnes beef in 2015. So applying this figure for the 2012 data that says 63 million beef cattle was killed and assuming 200kg beef is available out of a carcass (wiki) India produced reasonably more than 12.6 million tonnes beef in 2012. With data given by NSSO culled in Livemint (article 6/2017) we have an aprox 2.3 to 3 million tonnes beef output used up in domestic consumption. India is still left with an annual beef output of 7plus million tonnes.  This gap gives us an idea as to a figure of 38 million beef cattle (equivalent to 7.6 million tonnes beef ) smuggled out via illegal trade on an average when taking into account the data of 63 million beef cattle killed in the year 2012.  Little wonder that 30,000 illegal slaughterhouses vis-a-vis 3600 legal abattoirs proper because of this illegal cattle trade.  Recently in a TV debate a participant rued that there is a revenue loss to the Exchequer for an approximately Rs.70k cr annually. Understandably the political parties who raise their shrill voices against the lockdown of illegal slaughter houses are asking for pounds of flesh of UP CM who has shown his firmness in attacking this unmitigated nuisance.


A graphical depiction can be attempted as under:
                       

          

The curves L1, L2 etc are social welfare curves [F(Live Stock, Beef Cattle)=U]  which state  that any combination of Live stock OA and Beef cattle OB along a curve social welfare remains the same. It is a logical assumption for an ordinal measurement in terms of the curve L1 representing a lower level of welfare whereas L2 represents a higher order.   Assuming that quantity 0P represents 5 million tonnes of beef (equivalent to 25 million beef cattle) – 3 million tonnes consumed and 2 million tonnes exported as in 2015-- social welfare is indicated at  point C on L1 curve. However there is an outgo of 7.6 million tonnes beef (equivalent to 38 million beef cattle) which add up to 63 million beef cattle killed out of 387 beef cattle (assuming it to be the entire live stock) [table1].  This explains the illegal trading in terms of any combination between beef and beef cattle. The illegal market provides for fodder to the 30,000 illegal slaughterhouses.  The indifference curve analysis assumes away a situation like this. Here one of the fundamental assumptions breaks down—no two indifference curves can intersect each other! Obviously social welfare declines because of the illegal trade which is represented by the movement from C through to F, quantity PQ not being available to the society as it has been smuggled out; as such point F must lie on a lower social welfare curve. A lower SWF curve below L1 represents a smaller quantity of OA (live stock) than at C and OP (5 MnT beef) but will intersect F on L1 to account for the real-time illegal trade which is beyond the scope of the text-book assumption.  The


situation therefore demands correction in the shape of
government control over the illegal trade! If the govt control line AB succeeds in arresting the smuggled outgo by P’Q , as it should,   social welfare will increase and the society will move up to SWF L2, at a higher level of welfare which will also satisfy Pareto optimality (OP’ > OP, qty of OA remaining same as before).  At point C’ social welfare is lower (SWF L1) but when illegal quantity P’Q (C’D, rate of substitution being 1) is added to live stock, society is at E on a higher SWF curve L2 –by a movement from D’ to E or, alternatively from F to C’ and from C’ to E.  As for the argument that control of illegal trade will shrink employment, additional exports included in OP’ will give fillip to it by the concomitant legal business activity, which in all probability will also satisfy the Kaldor-Hicks compensation principle,  E being superior to any point between C and C’ on L1. The majority sentiment thus cared for and the resultant improved ecosystem must mean a shift forward of the SWF curve to L2 position indicating an increased welfare to society than at F. Lastly, illegal beef transactions are outside the scope of ethical economics similar to black money that causes havoc in the system.

Should not India therefore attempt to balance the beef cattle for such a meagre percentage of population (6.37%) to achieve a higher level of social harmony and welfare? Should there not be a limit on ‘secularism’ analogous to the Chandrasekhar Limit that finds a threshold for cold stars from collapsing. Let beef politics stay within its own limit to prevent the multi-cultural pluralistic India from collapsing on its own weight from ‘denser’ secularism!

Note: also consulted website: https://qz.com/643433/all-you-wanted-to-know-about-cows-in-india-in-charts/

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