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Indian Economy (88)

Draw a line between Chennai and Chandigarh. Seven out of the eight IPL cricket teams are on the line or to the 'Right' of this line. The only team that is to the 'Left' of this line, expectedly, is the Kolkatha team. And when the IPL will be expanded in the following seasons, one can readily think of teams from Ahmadabad, Nagpur, Goa, Kochi or perhaps Vadodara - all to the 'Right' of my imaginary line.

But to conceive of an IPL team from say Lucknow or Patna or Bhubaneswar - all to the 'Left' of my line even after ten years from now is as remote as snow in Chennai. The reference to IPL teams, at the outset, is to merely sensitise the reader to the issue on hand - growing regional (economic) disparity and its impact on national politics. After all, sport is an index of prosperity, isn't it?

While India had grown for the past three decades at approximately six per cent per annum, states like Gujarat, Tamil Nadu and Maharashtra which are to the 'Right' of this line  grew much faster rate than the national average. In contrast, states like Bihar, UP and Bengal - those on the 'Left' of this line grew lower than the national average. In the process, they did pull down the national average substantially.

What is interesting to note here is that in contrast to the 'North-South' divide as propounded by Raj Thacakery and his brand of politics, this is an 'East-West' problem or better still a 'Right-Left' problem.    

The word 'reserve' in the English language implies a sense of comfort. To an accountant like me it would technically mean an appropriation of profits - necessitating the existence of profits in the first place. To a common man it would imply savings or excess that is held back to be used on a rainy day.

Strangely, these definitions and understandings get turned on their head when it involves foreign exchange reserves (forex). For instance, if a country has $100 billion of forex with it, it is assumed that these are 'reserves', never mind even if that particular country has begged, borrowed or even stolen it! Naturally, we are in nebulous ground, debating the surreal and attempting to defend the indefensible.

Recent reports of a huge financial scam originating from Pune running into several thousands of crore rupees has brought into sharp focus the role of Foreign Institutional Investment flows, particularly Participatory Notes (PNs), in the Indian financial sector. PNs were also in the eye of the storm over their use in stock markets.

What added fuel to the fire is the recent statement of the National Security Advisor (NSA), Mr M. K. Narayanan, that terrorists could be manipulating the stock market in India. Speaking in Munich last month, he said: "Isolated instances of terrorist outfits manipulating the stock markets to raise funds for their operations have been reported. Stock exchanges in Mumbai and Chennai have, on occasions, reported that fictitious or notional companies were engaging in stock market operations."

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