Wednesday, February 29, 2012

6 Tips for Better Facebook Parenting


Monica Vila is co-founder of TheOnlineMom.com, an organization that provides technology education to families and helps moms connect with brands they can trust.

Recently, many people chimed in about the "Laptop Shooting Dad's" reaction to his 15-year-old daughter's Facebook posts. Not only is the subject of social media parenting popular, but his stunt has surpassed 30 million views on YouTube.

While it's evident that we live in a country of extremes — parents who use guns to make a point vs. parents that find this version of parenting horrific — the bottom line is that we all struggle to find the right balance when helping our kids through their tumultuous teen years.

During a recent #theonlinemom Twitter chat, nearly 400 parents weighed in with what they believed to be fitting alternatives to shooting nine bullets through a laptop. For instance:

  • Donate the laptop to a needy school.
  • Remove her privileges, like cellphone or allowance.
  • Impose an extended grounding.
  • Ask the 15-year-old to "clean the cleaning lady's home."

So what to do?

Fact #1: Parenting experts agree that a child who feels emotionally and intellectually connected to her parents is likely to make better decisions during puberty and adulthood.

Fact #2: 90% of teens with a social networking account have one on Facebook, and 7.5 million kids under 13are using Facebook to connect and share experiences with friends and family.

Conclusion: Embrace the platform.

Here are a few useful tips to keep in mind, whether your child is just getting started or is already a Facebook power user.

  1. Jump in. If your teen is an avid user and you are not familiar with Facebook, open an account yourself and become familiar with the environment. Ask your teen to help you, to teach you the basics and the settings and to explain why she likes to use Facebook. Remind your teen you'll be showing her how to drive a car soon — there's a great quid pro quo!
  2. Understand the importance of the platform. Facebook is not just a teen fad; it has also become an essential business tool. Your kids will need to be extremely savvy using and navigating social networks to stay competitive in the new economy.
  3. Do not post on her wall. If she decides she's going to friend you, refrain from any comments, offline or online. Do not comment to her friends when they pop by the house. Be respectful of the online space she has created with her friends.
  4. Learn to connect with friends and family. If your teen sees that you are genuinely using Facebook as a way to connect with others, she will be impressed and proud of your ability to embrace a new medium. And believe me, you might just enjoy it!
  5. Keep up. Facebook makes constant changes to settings, formats and even basic design, so stay involved and be aware of the changes. Embrace new apps by discussing them with your child. She will be able to relate to you on this level too.
  6. Talk about it. Talk about Facebook at dinner — it makes for a great conversation. For instance, discuss how Facebook is as big as the third largest country in the world; how different people use it; what constitutes a friend; the FarmVille and Mafia Wars mania; the company's IPO; where it may be headed, etc.

As your child's parent, only you can provide perspective that he or she will learn to trust over the years. Treat Facebook as a new environment you can both explore together.

Bangalore



 

 

 


 

 

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Are we wrong about Pakistan? - Peter Oborne in Daily Telegraph ....






Are we wrong about Pakistan?

Published: Monday, Feb 27, 2012,
Daily Telegraph

When Peter Oborne first arrived in Pakistan, he expected a 'savage' backwater scarred by terrorism.
Years later, he describes the Pakistan that is barely documented - and that he came to fall in love with

It was my first evening in Pakistan. My hosts, a Lahore banker and his charming wife, wanted to show me the sights, so they took me to a restaurant on the roof of a town house in the Old City.

My food was delicious, the conversation sparky - and from our vantage point we enjoyed a perfect view of the Badshahi Mosque, which was commissioned by the emperor Aurangzeb in 1671.

It was my first inkling of a problem. I had been dispatched to write a report reflecting the common perception that Pakistan is one of the most backward and savage countries in the world. This attitude has been hard-wired into Western reporting for years and is best summed up by the writing of the iconic journalist Christopher Hitchens. Shortly before he died last December, Hitchens wrote a piece in Vanity Fair that bordered on racism.

Pakistan, he said, was "humourless, paranoid, insecure, eager to take offence and suffering from self-righteousness, self-pity and self-hatred". In summary, asserted Hitchens, Pakistan was one of the "vilest and most dangerous regions on Earth".

Since my first night in that Lahore restaurant I have travelled through most of Pakistan, got to know its cities, its remote rural regions and even parts of the lawless north. Of course there is some truth in Hitchens's brash assertions. Since 2006 alone, more than 14,000 Pakistani civilians have been killed in terrorist attacks. The Pakistan political elite is corrupt, self-serving, hypocritical and cowardly - as Pakistanis themselves are well aware. And a cruel intolerance is entering public discourse, as the appalling murder last year of minorities minister Shahbaz Bhatti after he spoke out for Christians so graphically proves. Parts of the country have become impassable except at risk of kidnap or attack.

Yet the reality is far more complex. Indeed, the Pakistan that is barely documented in the West - and that I have come to know and love - is a wonderful, warm and fabulously hospitable country. And every writer who (unlike Hitchens), has ventured out of the prism of received opinion and the suffocating five-star hotels, has ended up celebrating rather than denigrating Pakistan.

A paradox is at work. Pakistan regularly experiences unspeakable tragedy. The most recent suicide bombing, in a busy market in northwestern Pakistan, claimed 32 lives and came only a month after another bomb blast killed at least 35 people in the Khyber tribal district on January 10. But suffering can also release something inside the human spirit. During my extensive travels through this country, I have met people of truly amazing moral stature.

Take Seema Aziz, 59, whom I met at another Lahore dinner party, and who refuses to conform to the Western stereotype of the downtrodden Pakistani female. Like so many Pakistanis, she married young: her husband worked as a manager at an ICI chemical plant. When her three children reached school age, she found herself with lots of time on her hands. And then something struck her.

It was the mid-Eighties, a time when Pakistan seemed captivated by Western fashion. All middle-class young people seemed to be playing pop music, drinking Pepsi and wearing jeans. So together with her family, Seema decided to set up a shop selling only locally manufactured fabrics and clothes.

The business, named Bareeze, did well. Then, in 1988, parts of Pakistan were struck by devastating floods, causing widespread damage and loss of life, including in the village where many of the fabrics sold by Bareeze were made. Seema set out to the flood damaged area to help. Upon arrival, she reached an unexpected conclusion. "We saw that the victims would be able to rebuild their homes quite easily but we noticed that there was no school. Without education, we believed that there would be no chance for the villagers, that they would have no future and no hope."

So Seema set about collecting donations to build a village school. This was the beginning of the Care Foundation, which today educates 155,000 underprivileged children a year in and around Lahore, within 225 schools.

I have visited some of these establishments and they have superb discipline and wonderful teaching - all of them are co-educational. The contrast with the schools provided by the government, with poorly-motivated teachers and lousy equipment, is stark. One mullah did take exception to the mixed education at one of the local schools, claiming it was contrary to Islamic law. Seema responded by announcing that she would close down the school. The following day, she found herself petitioned by hundreds of parents, pleading with her to keep it open. She complied. Already Care has provided opportunities for millions of girls and boys from poor backgrounds, who have reached adulthood as surgeons, teachers and business people.

I got the sense that her project, though already huge, was just in its infancy. Seema told me: "Our systems are now in place so that we can educate up to one million children a year." With a population of over 170 million, even one million makes a relatively small difference in Pakistan. Nevertheless, the work of Care suggests how easy it would be to transform Pakistan from a relatively backward nation into a south-east Asian powerhouse.

Certainly, it is a country scarred by cynicism and corruption, where rich men do not hesitate to steal from the poor, and where natural events such as earthquakes and floods can bring about limitless human suffering. But the people show a resilience that is utterly humbling in the face of these disasters.

In the wake of the floods of 2009 I travelled deep into the Punjab to the village of Bhangar to gauge the extent of the tragedy. Just a few weeks earlier everything had been washed away by eight-feet deep waters. Walking into this ruined village I saw a well-built man, naked to the waist, stirring a gigantic pot. He told me that his name was Khalifa and that he was preparing a rice dinner for the hundred or more survivors of the floods.

The following morning I came across Khalifa, once again naked to the waist and sweating heavily. Pools of stagnant water lay around. This time he was hard at work with a shovel, hacking out a new path into the village to replace the one that had been washed away.

A little later that morning I went to the cemetery to witness the burial of a baby girl who had died of a gastric complaint during the night. And there was Khalifa at work, this time as a grave digger.

Khalifa was a day labourer who was lucky to earn $2 (pounds 1.26) a day at the best of times. To prejudiced Western commentators, he may have appeared a symbol of poverty, bigotry and oppression. In reality, like the courageous volunteers I met working at an ambulance centre in Karachi last year, a city notorious for its gangland violence, he represents the indomitable spirit of the Pakistani people, even when confronted with a scale of adversity that would overpower most people in the West.

As I've discovered, this endurance expresses itself in almost every part of life. Consider the Pakistan cricket team which was humiliated beyond endurance after the News of the World revelations about "spot-fixing" during the England tour of 2010. Yet, with the culprits punished, a new captain, Misbah-ul-Haq has engineered a revival. In January I flew to Dubai to witness his team humiliate England in a three-match series that marked a fairy-tale triumph.

Beyond that there is the sheer beauty of the country. Contrary to popular opinion, much of Pakistan is perfectly safe to visit so long as elementary precautions are taken, and, where necessary, a reliable local guide secured. I have made many friends here, and they live normal, fulfilled family lives. Indeed there is no reason at all why foreigners should not holiday in some of Pakistan's amazing holiday locations, made all the better by the almost complete absence of Western tourists.

Take Gilgit-Baltistan in the north, where three of the world's greatest mountain ranges - the Hindu Kush, the Himalayas and the Karakorams - meet. This area, easily accessible by plane from the Pakistani capital of Islamabad, is a paradise for climbers, hikers, fishermen and botanists. K2 - the world's second-highest mountain - is in Gilgit, as are some of the largest glaciers outside the polar regions.

Go to Shandur, 12,000ft above sea level, which every year hosts a grand polo tournament between the Gilgit and Chitral polo teams in a windswept ground flanked by massive mountain ranges. Or travel south to Mohenjo-Daro and Harappa, cradle of the Indus Valley civilisation which generated the world's first urban culture, parallel with Egypt and ancient Sumer, approximately 5,000 years ago.

Of course, some areas of Pakistan are dangerous. A profile of Karachi - Pakistan's largest city and commercial capital - in Time magazine earlier this year revealed that more than 1,000 people died in 2011 in street battles fought between heavily armed supporters of the city's main political parties. Karachi is plagued by armed robbery, kidnapping and murder and, in November last year, was ranked 216 out of 221 cities in a personal-safety survey carried out by the financial services firm Mercer.

But isn't it time we acknowledged our own responsibility for some of this chaos? In recent years, the Nato occupation of Afghanistan has dragged Pakistan towards civil war. Consider this: suicide bombings were unknown in Pakistan before Osama bin Laden's attack on the Twin Towers in September 2001. Immediately afterwards, President Bush rang President Musharraf and threatened to "bomb Pakistan into the stone age" if Musharraf refused to co-operate in the so-called War on Terror.

The Pakistani leader complied, but at a terrible cost. Effectively the United States president was asking him to condemn his country to civil war by authorising attacks on Pashtun tribes who were sympathetic to the Afghan Taliban. The consequences did not take long, with the first suicide strike just six weeks later, on October 28.

Many write of how dangerous Pakistan has become. More remarkable, by far, is how safe it remains, thanks to the strength and good humour of its people. The image of the average Pakistani citizen as a religious fanatic or a terrorist is simply a libel, the result of ignorance and prejudice.

The prejudice against Pakistan dates back to before 9/11. It is summed up best by the England cricketer Ian Botham's notorious comment that "Pakistan is the sort of place every man should send his mother-in-law to, for a month, all expenses paid". Some years after Botham's outburst, the Daily Mirror had the inspired idea of sending Botham's mother-in-law Jan Waller to Pakistan - all expenses paid - to see what she made of the country.

Unlike her son-in-law, Mrs Waller had the evidence of her eyes before her: "The country and its people have absolutely blown me away," said the 68-year-old grandmother.

After a trip round Lahore's old town she said: "I could not have imagined seeing some of the sights I have seen today. They were indefinable and left me feeling totally humbled and totally privileged." She concluded: "All I would say is: 'Mothers-in-law of the world, unite and go to Pakistan. Because you'll love it'. Honestly!"

Mrs Waller is telling the truth. And if you don't believe me, please visit and find out for yourself.

                     
 
 
 
 
 



Tuesday, February 28, 2012

Hong Kong and the Mainland


Dogs and locusts

Old divisions find a new expression

DESPITE a plethora of festive new-year dragons and a few days of holiday, it has been a season of ill will in Hong Kong. On January 15th a young Mandarin-speaking girl dropped some dried noodles she had been nibbling on a Hong Kong underground train. Perhaps her family, from mainland China, did not know that eating and drinking is banned on the spotless metro. When a local Cantonese speaker objected to the noodle-eating in bad Mandarin, a quarrel erupted. The whole incident, recorded on a mobile phone, was soon viewed online by millions in Hong Kong and in China.

"That's what mainlanders are like," was perhaps the nastiest thing said by any Hong Konger in the metro carriage. But soon a well-known loudmouth professor at Peking University was suggesting that some in the former colony were "British running dogs". This caused some Hong Kongers to take to the streets to protest. On February 1st another group took out a full-page advertisement in a Hong Kong newspaper complaining about mainland "locusts" swarming into the territory; it called for the government to stop the "infiltration".

In the past two months Hong Kong has seen a spate of related protests: one against the thousands of expectant mothers who pour in from the mainland to give birth in local hospitals; another involving a march against Dolce & Gabbana, a prominent Italian retailer, when it was thought to be favouring shoppers from the mainland. Though Hong Kong reverted to Chinese sovereignty in 1997, a border still runs between the territory and mainland China, and access from the mainland is restricted. The Hong Kongers' broad complaint is longstanding: they see hordes of mainlanders putting a strain on public resources. Mainlanders in turn feel that Hong Kongers are arrogant and disloyal to the motherland.


What has changed drastically in the past few years is that the old fear of poor mainland Chinese swamping Hong Kong has been washed away by floods of rich mainland shoppers. Where onceHong Kongers disdained their countrymen from the mainland as Ah Chan, the derisory term for a bumpkin, they are now more likely to hear themselves disparaged asKong Chan, Hong Kong bumpkins, by mainlanders flush with cash
.

MySnap : Trees


CricTrivia

Before the Adelaide Test India had lost seven successive Tests away from home. Which country holds this unwanted record? 


India do hold this record - but not because of their current run of poor form. Between June 1959 and January 1968 they lost 17 successive Tests away from home, a sequence that included whitewashes in England and West Indies (both 5-0, in 1959 and 1961-62), England again (3-0 in 1967) and Australia (4-0 in 1967-68). Next come Bangladesh, who lost their first 16 away Tests, between April 2001 and February 2004. They have now played 36 Tests outside Bangladesh, and lost 32 of them.

Sunday, February 26, 2012

The Silent Indian National Anthem

A very moving and great new version of our National Anthem, ......do take a look ....saw it last night at a local cinema just before the main film began......

http://www.youtube.com/watch?v=r0Eb0ch4CU0&feature=youtube_gdata_player


RSK

MyReview : The Artist




A delightful movie that has rightfully received a few Oscar nominations, this one is a MUST SEE for those who like good cinema.

Set in the 1920s, when the silent movies were reigning supreme.....technological changes were happening and talking films were breaking in...the narcissistic super star of the silent era, so full of himself, fails to read the import of the new technology and its career-threatening implications and soon finds himself out of place and work in the new medium of talkies which springs up its own new stars . The hero's struggle to face the falling popularity, receding fortunes , the strong support of a girl whom he had given a break in the silent movies, the amazing dog who always shadows the hero : all in all, a good cocktail of engrossing story and competent acting. The movie is shot in black and white and is silent through but for the last 30 seconds.... some people may see shades of the Gurudutt classic KAGAZ KE PHOOL in this.... do go and see it and remember, not all my reviews are NEGATIVE 

RSK

Saturday, February 25, 2012

MySnap : Pune



Sunset from the Pune balcony

RSK

Who is in my window?




Know Your Liquor


VODKA 
Good to know: Vodka is least likely to give you a hangover Vodka is made by fermenting grains or crops such as potatoes with yeast. It's then purified and repeatedly filtered, often through charcoal, strange as it sounds, until it's as clear as possible. 
CALORIES: Because vodka contains no carbohydrates or sugars, it contains only calories from ethanol (around 7 calories per gram), making it the least-fattening alcoholic beverage. So a 35ml shot of vodka would contain about 72 calories. 
PROS: Vodka is the 'cleanest' alcoholic beverage because it contains hardly any 'congeners' - impurities normally formed during fermentation. These play a big part in how bad your hangover is. 
Despite its high alcohol content - around 40 per cent - vodka is the least likely alcoholic drink to leave you with a hangover, said a study by the British Medical Association  
CONS: Vodka is often a factor in binge drinking deaths because it is relatively tasteless when mixed with fruit juices or other drinks. 
HANGOVER SEVERITY: 3/10 
WHISKY 
Good to know: Whisky or Scotch is distilled from fermented grains, such as barley or wheat, then aged in wooded casks. 
Whisky 'madness': It triggers erratic and unpredictable behaviour because most people drink whisky neat CALORIES: About 80 calories per 35ml shot. 
PROS: Single malt whiskies have been found to contain high levels of ellagic acid, according to Dr Jim Swan of the Royal Society of Chemists. This powerful acid inhibits the growth of tumours caused by certain carcinogens and kills cancer cells without damaging healthy cells. 
CONS: Whisky 'madness' - erratic and unpredictable behaviour - is a common problem with drinking whisky. It's caused by the way most people drink it - neat, explains Professor Jones. 
His experiments show that among people drinking the same amount of ethanol, those drinking it in the form of spirits, such as whisky, had the quickest and highest peak in the blood alcohol concentration, which occurred less than an hour after drinking began. 
'If you drink any alcohol on an empty stomach, it can compare with getting it intravenously' 
Professor Wayne Jones 
'To slow absorption down, you could take it very much diluted or along with a rich, calorie-dense ingredient such as cream, as in Baileys or Irish coffee.' 
Whisky also contains lots of congeners, which tend to form during the ageing process in oak casks. 
A study by the BMA found that as a result, Bourbon Whiskey is twice as likely to cause a hangover as the same amount of vodka. 
HANGOVER SEVERITY: 8/10 
WHITE WINE 
Good to know: White wine is made from the fermented juice of grapes stripped of their seeds and skins. 
CALORIES: Around 130 calories per 175 ml glass; slightly more in sweeter wines. 
PROS: American researchers found that grape flesh contains the chemicals tyrosol and hydroxytyrosol, which help lower arteryclogging LDL cholesterol. 
CONS: It's the sulphites formed naturally or added to white wine as preservatives to stop it going brown which are the most likely cause of the 'white wine hangover' many people complain of. 
Sulphites also carry the risk of an allergic reaction which can worsen symptoms such as a headache, or asthma. White wines also wear away tooth enamel faster, making teeth more sensitive. 
HANGOVER SEVERITY: 6/10 

RED WINE 
Good to know: Red wine is made from fermented grape juice - but unlike white wine, with the skin and pips included. It's then left to mature for a minimum of three years, during which pigments from the skins leech out and colour the wine red. 
CALORIES: Around 120 calories in a standard glass - it's slightly lower in sugar content than white wine. 
PROS: Contains more reservatrol - a plant anti- oxidant - than white wine. This helps to prevent blood clots and reduce inflammation, which is now considered to play a key role in heart disease. Also, the pips and skins used in red wines contain tyrosol and hydroxytyrosol, chemicals which help lower artery-clogging LDL cholesterol. 
CONS: Red wine drinkers can get worse hangovers than beer or white wine drinkers. Because of the way it's made, red wine produces two types of alcohol - ethanol and methanol. The liver processes the ethanol part of the drink first and leaves methanol until last. 'As a result, it's likely to be floating around in the body for a lot longer than ethanol, giving you that familiar "morning after" feeling,' says Professor Jones. 
HANGOVER SEVERITY: 7/10 
Colour code: Red wine can cause a worse hangover than white wine because it contains methanol, a second type of alcohol that lingers in your body the next day ... 
BEER 
Good to know: Slow mover: Low in alcohol, beer is the least dangerous to drink 
Beer is made by fermenting barley. Hops are added for flavour and yeast to make the grains ferment into sugar and alcohol. 
CALORIES: It's the most calorierich alcoholic beverage - just one pint contains between 170 and 200 calories, about the same as seven chocolate fingers biscuits. 
PROS: Beer is the least dangerous to drink and makes you feel you drunk the slowest. 
It has the lowest alcohol content - between 3 and 6 per cent for lager, and up to 8 per cent for ale and stout. 
A pint also contains more than a quarter of an adult's recommended dose of Vitamin B folate, which stops the build-up of homocysteinea chemical linked to heart attacks. 
CONS: Beer is high in compounds called purines, which boost the levels of uric acid in the blood, according to a study at Massachusetts 
General Hospital. 
This can form crystals in joints, leading to painful attacks of gout. 
The 12-year study found that drinking more than two beers a day doubled the risk. 
Meanwhile, research published in the International Journal of Cancer showed that one pint a day adds a 10 per cent risk of bowel cancer, while two pints a day increases the risk by 25 per cent. 
HANGOVER SEVERITY: 4/10 
BRANDY 
Good to know: Brandy is a spirit distilled from red wine. Fine brandies are aged for extra flavour in wooden casks. 
Hangover hell? Brandy contains high amounts of impurities 
CALORIES: Around 80 in every 35ml shot. 
PROS: Because brandy is a distillation of red wine, it contains a high concentration of antioxidants which mop-up 'free radicals' which, it's claimed, can damage the body organs and tissues and lead to deadly diseases. 
Australian scientists discovered that the antioxidants created during the distilling process mean that 30ml of good brandy would give the equivalent antioxidant hit of the daily recommended intake of vitamin C. 
CONS: It could give you the worst headache of all, according to research at London <http://explore.dailymail.co.uk/locations/cities/london> 's National Hospital for Neurology and Neurosurgery. This was closely followed by red wine, then rum, whisky and gin. Not only does brandy contain at least 40 per cent alcohol, the high quality cask-aged variety is likely to have the highest amounts of congeners, which are formed during the lengthy storage and fermentation process. 
Professor Jones says: 'Brandy contains literally hundreds of different volatile compounds, which gives it the distinctive pleasant smell but also contributes to the hangover.' 
HANGOVER SEVERITY: 9/10 
CHAMPAGNE 
Good to know: Fast acting: Champagne 
Champagne and sparkling wine are made in roughly the same way as wine - but then more yeast is added and it's left to ferment in the bottle a second time, producing carbon dioxide. 
CALORIES: An average 175 ml glass of Champagne contains 133 calories, slightly more than a glass of white wine because syrup is added to improve taste. 
PROS: The antioxidants in Champagne may help protect your brain against damage incurred during a stroke and against neurological disorders such as Parkinson's and Alzheimer's diseases, according to a team of researchers from the University of Reading . They found that high levels antioxidants, called caffeic acid and tyrosol, helped protect brain cells from damage. 
CONS: The bubbles speed up the absorption of alcohol into the bloodstream. And contrary to popular belief, Champagne won't lift your spirits - alcohol affects brain receptors in the same way, whatever its source. 
'Alcohol basically works in the same way in the brain receptors as Valium,' says Professor Jones. 'It depresses brain activity and relieves anxiety. You might think you're in a good mood, but it's more likely the result of alcohol causing "disinhibition", making you more talkative and exhibitionist.' 
HANGOVER SEVERITY: 7/10 

Reserve Bank of India ( the Economist)


The Reserve Bank of India

Pulling every lever

India’s central bank is one of its best institutions. It is also complicit in a government-borrowing binge



















ONE of the perks of being governor of the Reserve Bank of India (RBI) is the use of a colonial bungalow on Carmichael Road, a posh street that weaves along a ridge in south Mumbai. On one side live some of India’s richest industrialists, modern-day pharaohs with flashy architectural tastes. On the other, a stone’s throw down a cliff, is a small slum—a monument to desperation and government failure. Both sets of neighbours are part of the 1.2 billion population that India’s central bank must look out for. In normal times this is a task that would furrow the brow; now that the country’s boom is faltering, it risks causing a blinding headache.
Judging by the numbers, the RBI is among the world’s best central banks. Its record on balancing growth and inflation is decent enough (see chart 1). Since 1995 wholesale prices have risen by an average of 6% a year, not too far from the RBI’s comfort zone of about 5%. Growth has averaged 7% a year. The RBI is also in charge of the safety of the financial system, to which end it yanks more levers than Willy Wonka in a chocolate factory. Its record here is excellent. Despite a current-account deficit that leaves India vulnerable to global jitters, the country sidestepped the 1997 Asian crisis (“nobody gave us a chance,” recalls a former governor) and the West’s banking crisis in 2008. The RBI also coped with big and potentially destabilising capital inflows in the euphoric years before Wall Street began to totter, and has avoided a domestic financial crisis despite fast growth in banks’ assets for many years.
Some fancy the RBI is a model for the kind of full-service central bank that is back in fashion worldwide—both the Federal Reserve and the Bank of England, among others, are now in charge of financial stability as well as interest rates. In truth, it would be hard to run a rich economy the way the RBI does India, with its financial system only partly liberalised. But the central bank has new clout abroad and at home its stock is high.
Under the present governor, Duvvuri Subbarao, a softly spoken figure, it has made a tough series of rate rises in the past two years to try to curb a stubborn spell of inflation (a battle that may not be over). And although the bank finds it hard to tempt star graduates to work in its tower overlooking Mumbai harbour—“if you look at its people and those of the Fed, there’s no comparison,” laments one bigwig—relative to most Indian state bodies the RBI has more brains, muscle and integrity. It is about the only institution in the country you never hear accused of graft.
That’s a big turnaround for a body that became a politicians’ plaything after India nationalised its banks in 1969. For two decades the state controlled lending and also fixed as many as 200 separate interest rates. It used the RBI as a piggy bank, forcing it to print money to finance its short-term needs. After 1991, when a balance-of-payments crisis led India to deregulate, the central bank rediscovered its spine. Agreements fully enacted in 1997 and 2006 stopped the state using it as an ATM, and as interest rates were liberalised and the bond market developed, the RBI began to look more like a normal central bank, setting short-term policy rates to try to balance inflation and growth.
This journey never reached the destination that was until recently in vogue in the West—that of a statutorily independent central bank narrowly focused on setting interest rates and targeting inflation. The RBI’s independence is not enshrined in law, although none of the four central-bank governors since 1992, interviewed by The Economist for this article, raised this as a big concern. The RBI consults the government but it has enough breathing-space to set rates as it pleases, they say.
And like a triumphant wearer of flares that have at last come back in fashion, the RBI’s wide remit—minting coins, managing the exchange rate, acting as banker for the government, and supervising banks and the bond market—is now seen as a template. These responsibilities helped it deal with the 2008 crisis: in short order it defended the currency, loaned money to cash-strapped banks, gave forbearance on troubled loans, soothed the bond market and eased banks’ capital requirements. Today a process of constant tweaking continues. In December, after a panicky fall in the rupee, the RBI introduced several obscure measures to bolster it, such as making it more attractive for Indians resident abroad to deposit money in the homeland.
Such fiddling has a cost. In 2007 an official report on making Mumbai a global financial centre—a work of great imagination—identified nit-picking and suspicion of foreign financiers (who are welcome to buy shares in India but not to play in debt markets) as a big problem. In 2009 an official review of finance chaired by Raghuram Rajan, a former chief economist of the IMF, worried that conservative regulation was inhibiting India’s potential. One local bank boss says the RBI “runs a repressed financial system which is intolerant towards innovation. If the US was at 90 out of 100 in terms of complexity and sophistication, we are at 10…I sometimes get the impression it [the RBI] is resting on its laurels, not realising that more financial innovation could help India’s development.”
Still, after years of financial convulsions abroad it is hard to say that the RBI has got the balance between safety and thrills wildly wrong. Indeed, the thing that endangers India today is not its financial markets but its government.
Heady talk of 9-10% as India’s new natural rate of growth is long gone. Many blame the government, which has not passed a significant reform for years while running a fiscal deficit of almost a tenth of GDP, including the states and off-balance-sheet items (see chart 2). The deficit—which began as an electoral giveaway in 2007, morphed into a stimulus package and is now just a product of indiscipline and populist politics—is widely seen as bad for India. Government borrowing crowds out the private sector, which has to live with higher interest rates than might otherwise be the case. Because the state is less likely than private business to spend the cash on investment, it does less to boost the economy’s potential.
At the RBI the boom of 2003-07, when growth was near double-digits and inflation comfortable, is now seen as a distinct era during which the deficit was falling, bullish firms were investing freely, a critical mass of reforms were in the bag and the state was productively solving day-to-day problems. Those conditions do not exist today. The central bank’s rule of thumb for the non-inflationary rate of growth has fallen to 8%, but that seems to bake in an assumption that the political class will recover its wits. If, hypothetically, that does not happen, insiders at the RBI accept that trend growth could be significantly lower. Bears outside the central bank talk of 6%.
The uncomfortable question for the RBI is whether it is partly responsible for the slowdown, albeit indirectly. If you have a central bank that always gets you home safely at the end of the night the temptation for politicians may be to go crazy. The RBI’s position is especially delicate on the fiscal deficit. The central bank oversees a financial system that is a conduit for funnelling savings into government bonds, 70% of which are owned either by the central bank or by the banking system, which remains dominated by state-owned lenders.
Although the ratio has come down, the RBI still forces banks to invest 24% of their core deposits in government bonds, far above what is needed to give banks a safety buffer of liquid assets. This creates captive demand for public borrowing (although during an economic soft patch such as today’s, cautious banks may voluntarily hold more than the minimum). The RBI also buys government bonds in the market. It argues this makes markets work smoothly, but most outsiders think the aim is to put a lid on government-bond yields. A spike in yields in November has been followed by a big, $14 billion RBI bond-purchase programme.
The RBI is thus in the weird position of publicly rebuking the government about its deficits while being the guarantor that they are financed. An extreme remedy would be for it to stop buying nearly so many bonds and to ease the rules on banks’ bond holdings. Without captive buyers interest rates would rise, perhaps by a percentage point or two. Some doubt whether the politicians would pay any attention—their appetites are insensitive to the government’s borrowing costs, it is argued. But the RBI would still probably like to try; in December 2010 it cut the liquidity requirement from 25% to 24%. The trouble is, anything more dramatic might be seen as meddling in politics and could prompt a bond-market rout that endangers stability.
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In this respect, as with its strong supervisory record, the RBI may have lessons for the world. Other central banks, including the euro zone’s, are propping up sovereign-bond markets. Mr Rajan talks of “the conceit that central banks are independent. When they find that the governments are not going to budge [on cutting their deficits] few feel able to just walk away.” In a speech on February 1st, Mr Subbarao, the RBI’s governor, worried that “in the presence of large sovereign borrowing…central banks typically have little choice.”
One possibility is that slower growth, high borrowing and lack of reform might eventually prompt a fiscal or balance-of-payments scare that even the RBI, with its impressive array of tools, struggles to keep a lid on. That might frighten the political class enough to act. The more benign scenario is that politicians will anticipate this risk and act spontaneously to get India’s public finances back on track. But politics is one thing India’s central bank cannot control. As he settles down at his villa to watch the sun set over the metropolis of Mumbai, all the governor of the RBI can do is cross his fingers.