Tag Archives: India

India’s Man at the IMF: Arvind Virmani

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The global crisis has had the effect of making over the IMF and giving it renewed power.

Until recently, the Fund had lost its international reputation for  what was seen as mishandling of the debt crises in Argentina, Asia, and Russia in the 1990s.

Now, however, with a universal cry of “do something” going up, it’s the IMF to the rescue. The Fund has had its monies tripled, and is at the center of a new global regulatory regime, ostensibly working with the G20 (the Group of Twenty, a forum that includes the twenty countries with the greatest GDPs).

The idea is that the G20, which has room for countries like Argentina, Brazil, China, India, and Indonesia, among others, will be more inclusive than forums limited to the developed nations. To check if this is actually the case, I’ve been looking at the structure and organization of the IMF and its affiliated groups, and will be posting what I find as I go along.

Exhibit A is India’s representative to the IMF. That’s Arvind Virmani, Chief Economic Advisor in the Ministry of Finance. Virmani, according to this article in the Indian Express, was educated at Harvard (PhD in Economics), was the Principal Adviser to the Planning Commission, and was also a contender for Vice President of the Reserve Bank of India. Before joining the government, he was a Senior Economist at the World Bank research department.

It’s always the case. The people who end up representing countries like India are all trained in the elite schools in the West, where the faculties are drawn from the US government, as well as the very corporations and international institutions that the representatives will interact with, and often be responsible for monitoring or regulating.

How independent can they be? And even if they’re personally ethical people, how easy will it be for them to even think outside the parameters set by the institutions in which they’ve trained and operated all their lives? Not easy at all. In fact, impossible.

Let’s see if we can trace some of the connections:

Virmani is an alum of Harvard.

It so happens that Larry Summers, current head economic adviser of President Obama, was the 27th President of Harvard (2001-2006).

Summers is said to have been behind Harvard’s investment in interest rate swaps that eventually lost the university over a billion dollars.

Before that, Summers was Chief Economist of the World Bank (1991-1993) – where Virmani worked before 1987- and then Undersecretary and Deputy Secretary of the US Treasury, before becoming Secretary in 1999..

Summers’ long-time mentor is Robert Rubin, whom he succeeded at Treasury Secretary.

In the 1990s Summers was a leading advocate of the Washington consensus–the proposition that free financial markets, “free” trade and fiscal discipline would bring prosperity to the world.

I put “free” in quotes because what it really amounted to was managed trade, manipulated by the US government with carrots and sticks of sorts…from nuclear weaponry to aid to penalties to sabre rattling  

While Summers was pushing the Washington Consensus, his mentor Robert Rubin, a former Goldman co-chair, was US Treasury Secretary, where he was instrumental in blocking legislation to regulative the derivative market.

Rubin also pushed through the repeal of the 1933 Glass-Steagall Act (keeping apart merchant banking and commercial banking), which enabled the consolidation of the banking industry.

Then, Rubin became the  director of Citigroup, one of the banks whose consolidation was made possible by that repeal. Citi shareholders have filed a lawsuit against Citi executives including Rubin charging that they sold shares at inflated prices, hiding the risks. Shareholders are said to have suffered losses over 70% since Rubin joined Citi.

Meanwhile, Rubin also has a Harvard connection, being a member of the executive governing board of the university, a position he landed a year after getting an honorary doctorate from Harvard.

Importantly, Virmani also shares his Harvard ties with current World Bank president, Robert Zoellick. Zoellick is also an alum of Goldman Sachs, a former US State and Treasury official, a Presidential assistant and US Trade Representative, and a double graduate of Harvard (JD and MPP).

Finally, the IMF position is known to be a sinecure for retiring Indian government economists, who can earn some hard currency for their retirement. 

Question: Even if Virmani were scrupulously honest himself (and he might be), how easy would it be for him to be able to stand up to policies carrying the imprimatur of some one like Rubin or Summers or Zoellick? Not easy at all. In fact, impossible…

Money Dominates India’s Ruling Class

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From Sainath at Counterpunch, an analysis of MPs (Members of Parliament) in the Lok Sabha (the lower house, or House of Commons, as opposed to the Rajya Sabha or House of Lords) in India:

“NEW is a coalition of over 1200 civil society groups working across the country. Their “Analysis of MPs of the 15th Lok Sabha (2009)” makes great reading and is the product of fine research and much hard work.

There were 3,437 candidates in the polls with assets of less than Rs. 1 million, says the report. Of these, just 15 (0.44 per cent) made it past the post. But your chances soar with your assets. Of 1,785 candidates in the Rs. 1 million to Rs. 5 million group, 116 (6 per cent) won. This win-ratio goes up to 19 per cent of candidates for the Rs.5 million to Rs.50 million segment. And of 322 candidates in the Rs.50 million plus or platinum tier, 106 (33 per cent) romped home.

The higher you climb the ladder of lucre, the better your chances. That’s obvious. But what’s striking is how bleak things are for non-millionaires. Even a modest improvement in your wealth helps. Say, you move from the below Rs. 1 million group to the Rs. 1-5 million group — your chances immediately improve at a higher rate than your wealth. (Of course that works only if you are already close to the Rs. 1 million mark.) So it’s not just that wealth has some impact on election outcomes — it influences them heavily and disproportionately as you go up the scale.

All of a piece with a society that only last year had 53 dollar billionaires (pre-meltdown), one that still has 836 million human beings who “get by” on less than Rs. 20 a day and which ranks 66th amongst 88 nations on the Global Hunger Index (just one notch above Zimbabwe). India has plummeted to rank 132 in the United Nations Human Development Index (one slot below Bhutan) as our billionaire count has risen. That wallows below Bolivia, Botswana, the Republic of the Congo and the Occupied Territories of Palestine in the HDI rankings. And never mind being worth billions – 60 per cent of adult rural Indians simply do not have bank accounts….”

Renouncing America in India (Comment added)

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Jeff Knaebel tore up his US passport out of hatred for the state and became a stateless person wandering through the villages in India. In case you’re thinking he must be some kind of hippy, Knaebel is a former CEO of a company and an engineer trained at Cornell University.

“The one actual, real and direct action that I could take was to break the paper chains that were holding me as a slave to the Empire. I tore up my U.S. passport at the Gandhi Samadhi, Rajghat, New Delhi. Rather than arrest me, the Indian police told me that I was free to roam anywhere in India, and to call them for help if I ran into any trouble.

The great Alexander Solzhenitsyn wrote, “Man is moral choice.” This is what I have been calling the Law of Moral Causation. By unilateral renunciation of my citizenship, I chose to assert my responsibility by denying that the U.S. government could act in my name and on my behalf.

Here is the quotation of a freedom fighter in Mexico which seems equally relevant to the India of today:

“Why is it necessary to kill and to die so that you should listen to Ramona, seated here beside me, tell you that Indian women want to live, want to study, want hospitals, want medicines, want schools, want food, want respect, want justice, want dignity? ~ Insurgente Marcos to President of Mexico Salinas after the cease fire in Chiapas, San Cristobal de las Casas, February 1994 (Our Word Is Our Weapon, Seven Stories Press).

I plan to continue to present to the State and to humanity the question of whether we are ready to permit a peace-loving man to exist and to move about freely, without tracking tags and permission-to-exist documents. Or have we been so thoroughly conditioned that everyone except third world villagers and tribal people is destined to live in the big surveillance sheep pens constructed by states all over the world.

Hat-tip to Lew Rockwell for running the article on his site.

My Comment

Bravo for the gesture.  But as an Indian by birth I must say I wouldn’t advise any expat Indian to try this. The Indian police will treat you very differently from a vellakara (this is Tamil for ‘white man’ ).  A friend of mine, a graduate of one of the Indian Institutes of Technology, spent the year after his graduation roaming India, minus “English language privilege” – i.e. he pretended he didn’t speak it. He said he saw a side of India he hadn’t experienced until then.

Besides, the cynic in me wants to know –  did Knaebel dispose of his assets before this gesture….or after? And if so, how? I’m sorry if my questions seem derisive. They’re meant respectfully.

I feel the same way about some…some... elements in the “patriot” movement.

Did civil liberties and the police state work them up so much when George Bush was in power? Is it civil liberties or the thought of an African-American president that incenses some people?

I’d say in a few cases it’s the latter….


Crime Rates and Propaganda

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Here’s an odd article in The Brunei Times, June 3, 2008 that lists India as the country with the highest numbers of murders.The caption reads India records highest number of murders in world. Now, what would the average reader take that to mean? The highest murder rate…

But that’s not the case at all.  Here’s the piece, with my comments:

“INDIA has recorded the highest number of murders in the world, a latest study by a government agency shows, news reports said yesterday. Data put together by the National Crime Records Bureau, a department of the Federal Home Ministry, showed that the number of murders in India, was three times that of Pakistan and double of the United States.“

Lila: Anyone glancing at this would immediately come away with the impression that the murder RATE in India was higher than anywhere else. When we say there are more murders in Gary, Indiana, than elsewhere in the US, or when we assess a city for its safety, we look at murder or crime stats in relation to the population.

“There were more than 32,000 incidents of murder recorded in India over 2007-2008, whereas there were nearly 16,700 murders in the US and about 9,700 in Pakistan, the NDTV network reported.”

Lila: This is clearly misleading.  Raw numbers placed next to each other suggest implicitly that the crime levels are comparable. They are not, because the population size varies.

“However, the survey clarified that the rate per population of murder and other crimes in India was much less compared to other countries.”

Lila: The figures for the rates of murder are tucked inside the body of the piece, where the casual reader isn’t immediately going to spot them.  Most people read the headline, the first two paragraphs and the last paragraph.

So, what’s the last paragraph here?

“Indian crime rate has been increasing every year.”

Lila: Well, India’s population has been increasing every year too. But is that mentioned?

This piece was in the Brunei Times last year. A casual reader might assume from this that India had more murders and rapes than South Africa. It actually has twenty and thirty times fewer, despite much greater population, population density, and poverty. Even in absolute terms, the US has more than four times the number of rapes than India, and South Africa has almost double.The US population is over 300 million, which is nearly a quarter of the Indian population of over 1.1 billion. So this really means the rape rate per capita in the US is sixteen times that in India.

This is the second article I’ve seen recently, which seems to be trying to give a misleading impression of India as a very violent country – more violent than Pakistan. There is violence in India – from terrorism. And a lot of that is fomented by rebels, secessionists of various kinds, and yes, by jihadists – many of whom are trained in Pakistan and Afghanistan.

Ruling Congress Party Wins Big in India

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AP reports:

The ruling Congress party swept to a resounding victory Saturday in India’s mammoth national elections, defying expectations as it brushed aside the Hindu nationalist opposition and a legion of ambitious smaller parties.

The strong showing by the party, which is dominated by the powerful Nehru-Gandhi political dynasty, laid to rest fears of an unstable, shaky coalition heading the South Asian giant at a time when many of it neighbors are plagued by instability, civil war and rising extremism.

My Comment

I quoted this news item not so much for its newsworthiness (since that’s not our business here) but because of the language it uses. A coalition or federation of assorted smaller parties representing more interests (and more diverse interests) is assumed to be less reliable than a single strong incumbent party. Why? Because it’s a time of instability and extremism in neighboring states (Pakistan, especially).

I am not going to argue one way or other about the case at hand, India arnd Pakistan. The situation and the players are too complex for that. But the language merits thinking over, since language is at the root of our problems. The reasoning is that looser federations deliberate more, act less cohesively and less effectively and that they can be manipulated or split apart and made ineffective. The inference from this is that a more centralized, more monolithic, more decisive central government is always a better leader in difficult times. From there it’s only a step to arguing for a despotic executive and emergency authority to clamp down.