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Wednesday, May 17, 2006

Reservations & Politics - Sushant Sareen

Use of reservations as a tool for increasing political support base suffers from a dual paradox. One, even though 'reservations' is a populist measure, it doesn't bring new votes; but it might lose you votes.

Second, the moment a person is empowered, he will no longer be beholden to the party or person who empowered him. After all, isn't empowerment all about being able to exercise choice?

Indeed, once empowered, an individual and a community will not be satisfied with the sops given in the past; their demands will increase and political players will find it increasingly difficult to live up to rising expectations of the newly empowered.

This is why Bijli-Sadak-Paani (BSP) and issues like law and order are taking centre-stage in areas where once Mandir and Mandal ruled the roost.

The politics of competitive reservations is useful only until the policy is implemented. Once reservations are implemented, they stop yielding any dividend to their advocates. Remember the Hindi saying; 'Bund mutthi lakh ki, khul gayi to khaak ki' (the closed fist is worth a lakh, but once it is open it is worth nothing).

Look at what happened to V P Singh. He is so rootless that he is reduced to trying to project himself as a messiah of the weak by protesting against eviction of slum-dwellers, and this, not in his local constituency -- which he doesn't have -- but in Delhi where he can't win a resident welfare association election.

The fate of 'leaders' like Human Resources Minister Arjun Singh, who have lost even the pretension of having any sort of a mass base among the electorate and yet continue to espouse anachronistic policies that they hope will make them relevant once again, will be no different.

Using reservations as a tool to carve a vote-bank has a number of other problems. The biggest problem is that any new reservation policy tends to polarise society along caste lines. The result of this social polarisation is that the beneficiaries of reservations tend to gravitate towards their caste-men, causing a political polarisation in which caste leaders emerge on top of the political process.

But since a single caste is not large enough to win elections, caste alliances are struck, which in turn leads to further social and political polarisation. The biggest casualty in all this is governance. With politics getting reduced to caste affinities, nothing that a supporting caste-man does is wrong -- rape, murder, dacoity, sedition, kidnapping, every crime of caste leaders is forgiven to retain the support of the caste.

The second big problem with reservations is that since no political party has the guts -- or vision and conviction -- to oppose quotas, they all support this policy. This is a damage limitation exercise by political parties.

Political parties know that opposing reservations will lose them votes of the sections of society being targeted by the reservations; but they also know that supporting the policy of reservations will not them bring new votes.

In the end, this becomes a zero-sum game in the face of a difficult political situation.

In this process, people like Arjun Singh, who hope to attract voters, turn out to be the biggest losers. Not only do they not get the votes of those whom they are targeting, they also lose votes of those sections of society who have lost out because of the new reservations.

Indeed, even though political opponents have been forced to support the reservations, they manage to attract the support of the sufferers, who in reaction to the policy, want to punish the proponents of the policy by voting for their opponents.

Interestingly, ever since the Congress government has announced its intentions of unleashing another round of reservations on this country, a strange phenomenon seems to be unraveling -- the OBC leaders aren't going ga-ga over the proposal.

A decade-and-a-half after Mandal, and the consequent crystallisation of caste vote banks, OBC leaders have realised that they now need to broad base their appeal. This can be done by attracting upper caste voters into their fold.

Mayawati is wooing Brahmins, Laloo and Mulayam are wooing the Rajputs, the trading community are hedging their bets and are no longer entirely in the BJP camp. The OBC leaders also know that while no one will be able to oppose these proposals, the wrath of the sufferers will fall on the proponents, while the benefits will accrue to them, after all they are the representatives of those who will benefit from Mandal-II.

So why make a song and dance about the whole thing and unnecessarily antagonise potential vote banks, something that will only benefit rival parties like the BJP.

Politics apart, reservations now being contemplated -- in all educational institutions (government and private) and probably also in the private sector -- will have devastating consequences not only on social harmony in the country but will also severely restrict opportunities for that section of society that seeks to get over its disabilities by advancing through education.

What is worse, if implemented, this reservation policy will lead to a reverse monopoly over avenues of advancement in favour of the OBCs. As things stand, the OBCs are today dominating politics in both the states as well as the Centre. They are also increasingly dominating the civil services. The only avenue left for the so-called upper castes was the very competitive private sector. But to get into the private sector required good education. This too will now be denied, or at least severely restricted, because of reservations in educational institutions.

Perhaps, if reservations were limited to only government or government-aided institutions, new opportunities would be available by the setting up of private educational institutions. But here too politicians have reserved seats for the so-called deprived sections. So, where do upper-caste students go?

It is not just the unfairness of the whole thing that is so galling. The whole reservation policy is really nothing more than taking a short-cut to address the deprivation of the weaker sections, a short-cut that in the long-run doesn't help anyone and leads to only an abyss.

This is because once a community gets used to walking on crutches, it can never find the moral, physical or even intellectual strength to walk on its own two feet. While there is not an iota of doubt that deprived and depressed communities require a degree of affirmative action, reservations is certainly not the answer to raise the self-esteem of marginalised people.

Rather than reservations, the government must provide excellent public education to all citizens. Let government schools compete and even beat private schools in education. But this means doing hard work to revamp the moribund public education system. In fact, the state schools are so bad that their products are educated worse than they would be as illiterates.

This was not always the case. Before independence, hardly anyone studied in private schools. The standard of even village schools was so good that their products went on to join top colleges and excelled in their chosen professions and careers.

But now, it is a curse to educate a child in these schools. The thousands of crores spent every year on public education is nothing but a huge waste. It is an open challenge to show one political leader in India, including VP Singh and Arjun Singh, who's children study in state schools.

Unless this happens, there isn't a hope in hell for public education. Incidentally, these messiahs of the poor prefer to get their own treatment done in the most expensive hospitals of the world where they know that no reserved category doctor will be treating them.

So before we start off on a new round of reservations let us pass a law that no one will be allowed to go abroad for medical treatment.

Finally, a word about the people who have most to lose from the new reservation policy. Frankly, the Indian middle class deserves what it is getting. The basic lesson which they need to learn is that if they don't shed their supercilious attitude towards politics and don't vote, and don't express their outrage with everything that is wrong in this country, they will get by-passed.

Today, not one MP depends on the middle class for winning his seat. As a result, not one MP espouses the cause and concerns of the middle class. Unless the middle class organises itself into a lobby and learns to leverage its votes for good governance, it will continue to be ignored and marginalised in their own country.

More from Ashish - Please Forward

Thought for the day : Before this I never even knew which of my classmates were in the reserved category. Now that the government has announced reservations, I do! First they came for the Jews
and I did not speak out
because I was not a Jew.
Then they came for the Communists
and I did not speak out
because I was not a Communist.
Then they came for the trade unionists
and I did not speak out
because I was not a trade unionist.
Then they came for me
and there was no one left
to speak out for me.

Pastor Martin Niemoller

Acknowledgments for the mail, are due to Vivek Arya, Arvind Dahiya, Aman Dua, Neha KG, Arunabh Sekhri, SC Marawaha

If reservations have be accepted, then should the agitation bargain for a time frame. Say five to ten years, after which the reservations will be abolished.

Though I am from so called OBC (As Jats are in OBC in Rajasthan, UP, Delhi) but I seriously feel that present reservation policy should be reviewed. Our inaction will destroy the future of our future generation.
Sincere try followed by failure is much better than inaction and injustice. Netaji Subhash Chandar Bose, failed to stop British army but is still most respected because he fought.

- Dr Arvind Dahiya

Why is the punishment being exacted from the children who are more liberal about the caste system than any previous generation of Indians has been.

- SC Marawah

Here are some concrete steps that we can take at individual and group level to do something in the anti reservation protests

1. Our objectives should be clear and our agenda should be chalked out clearly. We should have a common spokesperson that gives comments to the media and the rest of the people do not speak to media.

2. We should have some mechanism to co ordinate with the different cities. We could have an individual from each city to volunteer to coordinate the activity there and we could for a mail group to these individuals to have an orchestrated effort.

3. Legal Action
a. A PIL can be filed against the 93rd Amendment Act, which gave the government to impose upto 50% reservations in all educational institutes
b. For the same, a good legal counsel will be required, because the amendment was approved by the Parliament in Jan, 2006 with only one vote against it.

4. That the PM or the President have still not stepped up with a statement, is both shocking and concerning. Please send mails to them. My respect for my PM has certainly taken a beating
a. Prime Minister -
b. President -

5. Delegate groups of five to ten students to work under a common umbrella and to garner support from different fronts. Each group to target a specific person or task on Monday. Make use of the strength in numbers. Hunger strike and gatherings and slogan shouting don't seem to be helping
a. Politicians
b. Journalists – Target Vir Sanghvi, Karan Thapar, Vinod Dua, Aroon Pourie, Shekhar Suman, Navjyot Sidhu, Prabhu Chawla
i. Target the journalists coming to cover the agitation in their own game. Get hold of them, ask them their views and ask them to help behind the curtain without coming out with a bias
c. Industrialists – Narayan Murty, Azim Premji, Rahul Bajaj, Lakshmi Mittal
d. Delhi University
e. Schools of Delhi – A moving media statement may bring the children who are on vacation to the streets
6. Target the International Media. If we rope in the BBC and larger news channels then the politicians will have to listen. Exhaust all journalist contacts.
7. The think tank to sit and devise answers to disturbing questions raised by media. Think what we are going to do if government evokes the ESMA? We should have more carefully designed answers and uniformly worded. Each student should be reciting the same answer to prevent confusion and to prevent being tricked by experienced journalists.

a. What are you doing when patients suffer

i. Patients suffer in every strike. When the auto drivers go on strike a patient may die if he cant reach the hospital in time. That never is highlighted in the media.

ii. Will the patients not suffer if the quota is instituted? Or will we then accept it as the will of God?
b. Get more girl students in front of the camera.
c. Are you not in favor of Equitable justice

i. Will reservation creat an equitable society? If yes, then go ahead and reserve 100% seats for five years. Give a time frame.

ii. Jawahar Lal Nehru said that reservations are not the answer. This was quoted today by Karan Thapar

8. Organize debates on public platforms. For and against the motion. The best speaker gets to represent the issue in front of the media. Poster making contests, slogan writing contests, poetry writing contests and best picture taken contests. We could give them huge prizes and then ask them to donate a part of their prizes for the common anti reservation fund.

9. Organize an anti reservation protest march on Sunday 21st May 2006 in Delhi. If anyone has taken pictures of the police brutality against medical students or has any pictures of the protests taken personally by you, which would not cause copyright problems, then please email them to me at urgently with a clear note that these could be used for publication in public forums. If we think we are better than the current breed of politicians, we need to beat them at their own game, with their rules.

Ashish Goel

Apathy or Inability – welcome to the Democrazy!

The facts: Seven hundred medical students, disturbed by certain issues, express their desire to meet the first citizen of the country, proceed peacefully towards the Prime Minister's office, are manhandled, tear gassed and brutally assaulted by the law enforcers of the city. Some are detained in police stations, and some land up in emergency room of hospitals seeking treatment for injuries. The PMO choses to remain silent.
The residents and the students join hands and declare strike. The media takes the issue in a luke-warm fashion and plays the devil's advocate, projecting the striking doctors as the root cause of the patients' suffering. Peacefully protesting doctors in Mumbai were brutally lathicharged infront of the Governor's house. Some media channels highlighted the atrocities. The Police officials accused the students of damaging property and dismissed the issue as minor commotion. Friends, welcome to Democrazy!

Are medical students of the top five medical colleges of the country, arguably some of the best brains that the country has in the current generation? Is it justified to treat them as common men? If yes, then like everyone demands their rights and voices their opinion in form of strikes, violence and hooliganism, so they are justified in their desire to make their voice heard. If no, then was the brutal handling of the youth justified? Please consider they are not even full grown adults. A medical student is only 17 when he joins college. What message do you convey to these children when you assault them brutally, tear gas them or hit them with water canons? And for what objective?

Is our Prime Minister so unapproachable to the best minds of the nation for an issue which concerns them? How does the current government then try to identify with the masses of the nation? Is our political think tank so far away from the common man that to meet the PM our students need to face physical and mental humiliation? If the medical students are not our masses, then who is the common man?

More than 24 hours have passed after the students tried to meet the PM and were chased and beaten away. Yet the PM remains silent. No statement has been issued by the PM office regarding the issue raised or the sad turn of events. Is our Prime Minister, incapable, apathetic, indifferent or a mute spectator? Does he await orders from other sources, (divine intervention) to open his mouth and speak? Like the HRD minister, the PMO would probably offer an apology for the misbehavior meted out to the students at the hands of the law enforcing agencies when the office opens on Monday. Has this become a mockery? First you slap an individual and then two days later, sweetly apologize and then request to forget and forgive. The doctors are expected to attend to emergencies on weekends, but the PMO has no emergencies. It remains silent over the weekend. Of course it is probably a matter too trivial to respond on. Or is the PM waiting for directives on what he has to say. It is also possible that the speechwriter has taken ill and is not finding any doctor who will attend to him. The HRD Minister had comfortably said that he was unaware that students wanted to meet him, and expressed his sorrow that police had mistreated them. A similar answer could be expected from the PM and the Governor of Mumbai. If their information system is so defunct that they don't get a message from outside their gates for 24 hours, what are they sitting in office for and how are they managing the entire country?

The media focuses attention on suffering patients outside hospitals. The core issue has largely been cold-shouldered. The double standards adopted by the media are clearly evident, and they wait to capture the most emotional story to catch the prime slot for maximum viewership. God forbid if there is mortality outside the hospital, be sure that you will catch the eventuality on the news channels with the sensationalization even before the calamity has actually occurred.

The patient suffering seems to be the sole responsibility of the doctors who are on strike. They have moral, physical and emotional responsibility of all the suffering caused. The silence from the PM office is shattering. There is not even a word from the Prime Minister. Is he following what has long been our foreign policy, 'watching the situation closely'? Or is this something right out of our gynecology textbooks, 'watchful expectancy'? This is sheer mockery of the highest office in the country.

Is the faculty of medical colleges and hospitals, merely supportive or is willing to become an active participant in the whole issue? Where are the nurses, and the hospital attendants? What is their role in the issue and are they supportive or participant? The pool officers, research staff and the residents of Hospital administration, are you not doctors? Do you not wish to favor or support the reservation agitation? Why is there such deafening silence from the IITs, IIMs and other intelligentsia of the country? Does the reservation issue not affect you or bother you? United we stand divided we fall.

We are creating all the fuss when the certificate for your reserved status can be obtained in INR 1000 from any government office in Chandigarh as the news channels reported. Why don't we all approach such agents and get ourselves the certificate and thereby become eligible for the reserved quota?

We are a society that is sitting on a live fuse. Angry scuffles have become common following minor road accidents and have given birth to the phenomenon of 'Road Rage'. It will not be a surprise if 'Rang de Basanti' does not remain a mere movie to be watched in theaters, and the PMO has a serious situation to deal with if the current one is not serious enough to provoke comment.

– Ashish Goel, Senior Resident, AIIMS

ENAM - IT Sector

Outperformer  : Satyam, i-Flex
Neutral       : TCS, Wipro, HCL Tech
Underperfomer : Infosys

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The Grapevine

Fund buying was seen in Gujarat Ambuja Cements, ACC, SAIL, Dabur India, Hindalco, Bajaj Auto and HLL. On the other hand Orchid Chemicals, Punjab National Bank, Glenmark Pharmaceuticals and Strides Arcolab witnessed fund selling.

Trading Call

Trading Call Updated
Date: 16/05/2006 | Company Name: ANDHCEM | Call Type: Go Long
Stop Loss/ Reversal: 37.0000
Buy/Sell Price Rs.: 41.50
Current Price Rs.: 37.30
Potential P/L%: -8.4300
Target: 65
Investment Argument: The stock has seen a break-out from a triangle formation. Buy the stock with a stop loss of Rs35 for a target of Rs65

Deccan Aviation IPO - HDFC

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ENAM - India Strategy

DP Recommends Read

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Another Chance to Buy - Sharekhan

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Deccan Aviation IPO - Equitymaster


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Deccan Aviation - SKP

The price band for Air Deccan issue was fixed at Rs 150-175 per share. The face value is Rs 10 per share. The issue date is between May 18, 2006 and May 23, 2006.

SKP Research report on Air Deccan:

Company overview:

"Deccan Aviation Limited, a Bangalore based company operates Air Deccan, a low - cost commercial passenger airline and Deccan Aviation, a private helicopter and airplane chartering service in India. Air Deccan which began operations in Aug, 2003 was the first Indian airline to follow a no - frills, low - cost passenger airline business model. The business strategy focuses on offering low fares to attract cost conscious middle class and corporates, selecting new routes and reducing costs. Such a strategy seems to have worked well so far, as the airline has managed to corner a market share of 16% in three years of its operations. Deccan Aviation, India's largest private heli - charter company provides heli - services for company charters, tourism, medical evacuation, off-shore logistics etc."


Strong economic growth:

"India is witnessing strong economic growth which will fuel the demand for air travel. The sector grew at 15.7 % CAGR from FY02 to FY05 on the back of robust growth in economy. Rising income levels and low air fares would attract people who travel by railways or other modes of road transport."

Emergence of low cost airlines:

"Low cost carriers like Air Deccan, Spice Jet, and Go Air has changed the Indian aviation landscape by offering low air fares and making air travel more affordable. More such service providers are expected to launch their operations in the future which would further increase air traffic in India."

Under-penetrated market:

"Despite the strong growth in air passenger traffic, the sector continues to be under - penetrated with an average Indian making 0.02 trips per annum against 2.02 trips in the US in FY05. Such a scenario leaves enough headroom for growth in air travel as it becomes more affordable for a larger population."

Growth in tourism:

"The tourism market has been growing at a significant pace for the last few years helped by government initiatives to promote the sector. Travel and tourism expenditure is expected to grow at a real rate of 8.8% from FY04 to FY14."



"Airline companies are vying to capture a larger market share by offering rock bottom fares. This unhealthy competition would have a negative effect on the margins. Some low cost carriers have come to the market in the last few months and more are expected to launch their operations in the future which will further intensify the competition."

Loss Making:

"Deccan Aviation incurred a loss of Rs 35.2 crs and Rs 68 crs in FY05 and six months ended Sep 30, 2005 respectively. The management believes that the prospects of the company turning profitable would depend largely on successful implementation of the capex plans for Air Deccan and demand for low - cost flights."

Fluctuations in the prices of Aviation Turbine Fuel (ATF):

"Fuel costs accounted for 32% of the total costs in first half of FY06. ATF prices have fluctuated in the past due to the higher volatility in crude oil prices."

Reccomendation: Subscribe to the issue with a long term perspective.

"Deccan Aviation Ltd has been incurring losses since FY04 and has a negative EPS of 13.86 (annualised) based on H1 FY06 earnings. The prospects of the company turning profitable depends largely on successful implementation of the growth plans of Air Deccan and the demand for low - cost travel. Strong economic growth and under- penetrated market will drive the growth of the sector going forward. Air Deccan with its first mover advantage in the low - cost segment would be the major beneficiary of this growth."