Who is subsidizing whom?

This week saw the protests and discussions on fuel( petrol ) price hike. It was mentioned that middle class will be crushed under the load of inflation/fuel price hike etc. etc...

Frankly none of this is true.

Middle class in India is in fact pampered a lot and subsidized by none other than the poor!

Consider this:

1)Rail travel is subsidized
2)Full Education from school to post graduation and even doctorate is subsidized
3)Fuel including cooking gas , diesel and till recently petrol was subsidized
4)Food is subsidized
5)Water is subsidized in most municipalities.
6)Government Hospitals provide very cheap services
7)Most importantly Even most services are subsidized!

Who is paying all this subsidy? Industry ?


Well it's poor farmers and factory and household worker/bai/butler etc .

How?

Ever wondered how these people earning in the range of 2 to 5,6 thousand Indian rupees make ends meet? How can they live in an expensive cities like Mumbai, Delhi and other Tier 1 and 2 cities with these meager income?

Well they live in slums and make their ends meet . If they start living at the minimum standard of cities and in their own pucca house , their services will become much more costlier.

Hence they actually provide "subsidy" the middle class.

It is a well known fact that Indian farmers do not get enough profit for their produce . Inflation for primary articles has remained stubbornly high since last few years especially food and vegetables.

There is a very simplistic explanation to all this.There has not been enough investment in agriculture in India and the reason for that is that there is not much return.Hence any slight demand uptake leads to high inflation of these commodities.

Again who has benefited the most from the low food prices over last few decades?

Not the farmer which constitutes the most poor of India.

The only way out of this quagmire is increase prices to such a level where it becomes attractive for farmers to produce more and do investment. This will ensure better supply side elasticity in future.

The fuel subsidy which amounts to a 1-1.5 lakh crorers every year. It can simply be diverted from middle class to farmers and poor people .
Now ,There is a very the old thinking ( mindset actually) that out of 1 Rs spent by Government only 15 paise reaches villages ( Rajiv Gandhi's utterances, he was surely not an economist).It is not true. It is possible to ensure that almost all of it reaches the poor.

Subsidize raw material like fertilizers , seeds , pesticides and provide direct account transfer of subsidy, increase budget support to rural employment programs, reduce interest on loans to farmers etc.There are many ways ...

Middle class tends to be a vocal vote bank , but not decisive one.Government will do well to get rid of lopsided subsidy as soon as possible.

Economics beyond Demand and Supply

All of us have been taught about the simple demand supply , IS LM Curve etc. etc. in Macroeconomics. Although the principles hold true, I believe they are just one among the many factors that affect economic development.

US economy performed well in 20th century not only because of favorable demand –supply dynamics there were other factors responsible for growth and development. Most Middle east countries have abundant natural resources ( namely OIL) but are way behind in terms on innovation , human development index , Ginni’s coefficient ,literacy , employment etc .England did not have natural resources worth mentioning , but had a supporting social structure which was responsible for it’s dramatic rise in 19th century.

I believe the following factors are as important or more for sustained economic development.

•Social: This is the most important factor for sustained economic development. If a society is open to change, is merit based , encourages innovation , well educated ( merely being literate is not enough), fair , has enough checks and balances to avoid excesses I believe seeds of prolonged economic growth are already sown.

India for one never had a fair society for millenniums together, social movement was restricted,
women largely are not part of workforce; large sections of the society were not permitted to take education and so on. But this just shows how much latent potential Indian society has to aid economic development in coming decades.

•Political: Imagine a political system where politicians do not want people to be educated, economy to develop to perpetuate their rule . There are basically two ways former is the easier way, the tougher one entails economic development and deriving political mileage out of it . Sadly Indian politics in 70s and 80s ( in fact till recently ) was of first type. There is no example of a banana republic doing well economically over longer run.

•International Relations: There are so many countries that have benefitted because of their proximity to certain countries . UK , Japan , Korea benefitted immensely from US. South America is an contrary example. Of course, it is incumbent on politicians of any country that this factor is positive for them, but it may not always be the case.

•Natural Resources: It is said that presence of natural resources greatly contributes to economic development. There are not many examples where natural resources alone can single handedly ensure economic development . There is enough research material that suggest that presence of natural resources Crowds out of Innovation and hence may not be of any help over longer run. Perfect example : Middle East .



•Demographic: Population was considered bane till a decade ago , till a concept called Demographic Dividend arrived . Japan did not have favorable demographics and the economy stagnated since 1990 . I believe It is a very important factor for developed countries. Sadly continental Europe , Japan and to an extent US do not have favorable demographics.

•Geographic: Ask anyone in Land Locked Country and you’ll know how important this factor is . Favorable geography, whether patterns etc. will be positive for any economy. India has a huge advantage on this front .

•Historical: I believe this is a factor that influences social, political factors and hence it only indirectly affects for example, a child born in US or UK gets a head start because of well-developed infrastructure and society as compared to developing countries.

Need for players with Multi Service Capability in LPO Space

There has been an explosive growth in the LPO industry in India in last few years.

Currently, bulk/majority of the revenue in LPO currently comes out of Document Review which is considered to be lower end of LPO value chain. The fear surrounding such work is always that over a period of the time these services get commoditized. The commoditized business is easier to replicate and hence entry barriers for competition is lower. To add to woes of LPO Service Provider beyond cost arbitrage client do not perceive any value add of the service provider. This creates significant long term sustenance issue for LPO service provider.

LPO service providers in India have also ventured in the following services:

• Contract Management
• Intellectual Property Services
• Legal Research Services
• Litigation and Administrative Support Services

I have an analogy here.

One can't help but notice the growth of IT services just a decade ago. The services offered then were largely on labor cost arbitrage, application development and maintenance (ADM) to be specific. Now India is a leading IT Service provider. Now, top IT services providers manage end to end processes rather than just ADM. Moreover the nature of outsourcing has moved deeper from one that required single capability to multi-capability like ADM, Infrastructure Management, Project Management, Consulting, PLM, Validation and testing, analytics, business intelligence, predictive modeling, BPO to name a few .

LPO Industry as it matures will also move from primarily traction processing to process outsourcing to being a value added legal services partner.

However to be a true legal service partner, clients will require transformation partners who can understand their business and provide value added services.
This leap however requires a different set of skills, mindset, organizational capabilities and strategies.

If one goes by the same trend as IT Services, I reckon that the following skills and capabilities (not exhaustive though) will be a part of any legal services engagement in very near future:

Quality and Process Management: These skills are key to any successful engagement.

Utilization of Technology for LPO Domain: This involves continuous improvement on the quality, process, turnaround time, consistency etc., through development of specific and reusable technology, IT tools, most of them developed in house.

Knowledge Management: This is key for knowledge intensive services like LPO. As any (fast) growing industry, attrition will be a problem in future in thin industry which makes this skill critical for this industry. Every client in LPO space has its own associated processes, terminologies, methods, procedures, rules, nuances, a lot of which may change routinely. A robust KM process will ensure alignment of the LPO engagement with the client.

Project Management and Transition Management: These capabilities will be required for management of any large/complex project or engagement especially in a multi service LPO environment.

Associated BPO Services: There are associated services with any process and LPO domain is not an exception. These services will be required as the client engagement in LPO domain deepens.

Global Sourcing: Getting right skills at right place and time will go a long way in maintaining competitive edge for LPO firms. Deeper engagements will require onsite-offshore model.

Consulting: These services are provided as a value add and for upselling. These services will be offered as the LPO firms build domain expertise. The services can be as varied as consultation on CRM to benchmarking for law firms.

One may simply argue that any new service starts as a simple offering and progressively gets inclusive, deeper, complex with interdependent disciplines as the service matures. Hence, the same will also apply to LPO services. My point is that though that is true, standalone transaction focused LPO service providers will find it incredibly hard to scale up on the skills mentioned above.

Hence the LPO industry today requires multi-service players as it matures. These players are/will be much better placed in terms of business value add to customer and also in terms of overall competitiveness.

Standalone transaction processing oriented players unless they are able to find niche or acquire domain skills, will be acquired or loose competitiveness.

India's Public Debt is Manageable

There has been a lot of discussion about high fiscal deficit that India is experiencing right now especially with respect to the current debt crises in Europe and America. Here are my thoughts:

Composition of Public Debt:
Currently India's Central Government debt is 54.35% of GDP which looks relatively high especially given India's high fiscal deficit.
Central Government's public debt is largely internal. Out of the total public debt, only about 8.5% is external debt (about $250 Billion). Out of the total external debt, only about 20% represents short term debt. (See Source: 1 below)
Keeping external debt at manageable levels has been a conscious policy of the GOI, especially after the 1991 crises.

However, India is in a different league all together.
India's tax regime will go through a paradigm shift in next few years. There are other factors, apart from GDP growth that'll lead to a sustained northward movement of tax to GDP ratio.
Here's how:

GST and Direct Tax Code:

Implementation of GST and direct tax code, by all indications should happen from April 2011.
Direct tax code will simplify the indirect tax regime and procedure. This is expected to bring in more direct tax due to increase in compliance. Ditto with GST. GST will simplify the indirect tax structure and India will truly become a single market.

Inflation:

India's WPI inflation for past decade has averaged 5.2%. (See Source: 2 below) There is no reason to believe that the there will be any substantial downward movement in the trend in medium term. This high inflation will also lead to higher tax collection in nominal terms, everything else being equal.

UID Project:

Enrolling for Unique ID Project (UID) will start in FY12. This initiative will go a long way in ushering in transparency. This initiative will also simplify governance and bring in capabilities to the government that they have only dreamed of. Transparency will (hopefully) reduce the black market activities, tax leakage and should lead to tax buoyancy apart from the benefit of sharply targeted subsidies.

Demographic Dividend:

India starts getting demographic dividend now. Demographic dividend causes economic boom as the proportion of working population to total population peaks.

The combined effect of all the above, over a period of time is substantial movement of TAX-GDP ratio northwards.


References:
Govt of India : http://finmin.nic.in/stats_data/nsdp_sdds/index.pdf
RBI : http://rbidocs.rbi.org.in/rdocs/Speeches/PDFs/BCCED060410.pdf

Hum Hai Na - ICICI Bank

Hum Hai Na ( we are there for you) - that is the customer service theme of ICICI Bank and I had quite an experience of that recently .

The bank sent me a debit card for a replacement last year which I lost .I requested for a new card online sometime in February this year for which the bank charged 200+ Rs upfront. The bank asked for e mail id and mobile no upfront for logging the call.

When I did not receive the card till April , I decided to complain. I got an e mail response that the courier has returned because I was not available at home and that I need to call the courier via the call centre . Now ICICI Bank call centers and their IVR menu is the last thing that I want to turn to as on an average it takes 15 minutes to half an hour to talk to an agent. I waited and again complained after a fortnight. This time the response was that the card has been deposited in the bank branch and I should collect it from there. I simply refused this as I wanted the card to be delivered to my home.

A fortnight passed and I again complained .This time the response was that the card has been destroyed as nobody collected it.I was really annoyed .The bank has taken a service charged , did not deliver the service and got the card destroyed unilaterally without making any attempt to contact me .Why has the bank taken my mobile no then?

I complained again and response this time was that the card cannot be delivered as my pin code is out of service area. I was really turned up now and finally reluctantly decided to call ICICI Bank call centre. Their response was that they cannot send the card by courier as the pin code is not serviceable and that they are sending it by post instead which may take a fortnight. This after I threatened the bank that I'll complain to RBI , Indian banking regulator. The other point is that I do not buy this not serviceable pin code theory as I have received courier and other letters from the bank itself. Moreover I live in a prominent locality.

Finally after ten days it was party time for me as I received the debit card .The joy was however short lived.

Among the plethora of letters along with the card , there was a letter mentioning that the card needs to be activated .Further I could expect a PIN in ' next seven days' for the card which I never received .As per the letter there are two ways to activate the card: By submitting a form at the branch or through the call centre .

I decided to call the call centre .The number of the call centre was mentioned in the letter.

This sequence for these calls is amazing and precisely why I want to avoid calling.

First Attempt

As per IVR , I apparently exceeded the maximum number of attempts .The call hung up.

Second Attempt

As per IVR , I again exceeded the maximum number of attempts .The call hung up.

Third Attempt

This time I was lucky as I could talk to an agent. He mentioned to me that the system was down and that he cannot check the details .He apologized and asked me to try after half an hour.

Fourth Attempt

I tried after one hour . I chose unblock for card option in IVR which I made out is equal to activation of a card .This is confusing.

The call centre executive mentioned that I have called wrong service number as that number is not for NRI services. I told him that this was the number mentioned in the letter sent to me and the agent apologized .He nevertheless connected me to the 'right agent'.

The 'right agent' took my details and told me shockingly I cannot activate the card through the call centre. When I confronted him and mentioned about the letter that I had received - he apologized. He also mentioned that I can request for password only when the card is activated. He suggested that I could write to the Manager online through my bank account and get the card activated which I did.

I'm now free to ask for another service from the bank - password for the card!

The net result - seven months after I requested for a debit card replacement , I have got a card which is not activated and I'm still awaiting for the password .

The effort and money ( my mobile bill) that I have to make for a simple service is really amazing. This in fact is not first of it’s kind experience.

ICICI Bank is anyways not known for service. If one visits a branch you can cool your heels for half an hour as you'll be in 'Q' for average that much time.

If you try call centre be sure of getting conflicting answers and frustration as you'll have to wait for at least 15-20 min to talk to an agent. Moreover no two agents will give the same response.

I'm moving away from the bank and will try for some others.

]

Singh is King

I watched the Drama that unfolded on 22nd July in the Indian parliament , I was wondering the nuclar deal could have been completed at a later date as well.So what was the hurry? Was it a masterstroke or a gamble that paid off in the end for the Congress?

One thing is clear that the INC ( Congress) was working on for months together to garner support and that it was quite confident of winning the trust vote.

There can be various possibilities why congress chose to part ways with the Left and go for the trust vote .Some of them may be:

• It wanted to divert attention from the 'price rise/inflation issue'. The issue had to be dragged for weeks together and should be substantial enough
• It was waiting for the right time and allies to jettison the Left . It got the allies and the issue.
• It wanted opposition to split ranks so that it can gain some allies before the election.
• It hoped that it can hype the achievement and hope to gain some votes in incoming elections.
• Dr.Singh wanted to leave behind a big ticket achievement for himself as his legacy . This of course assuming that the government thinks that it has little hope to win the next election
• The congress being the core Left opposition party in states ruled by them did not want to go to elections with the Left and wanted to carve out an identity of itself before the elections.
• It was impossible to run the government with the left and July was the right time to jettison them and do what congress always wanted . As there can be only one no trust motion in a session the government was sure that elections would not be called early , at least not in 2008.
  

For a person who has been ridiculed as ' weakest Prime Minister ' by the opposition ,Dr. Singh has proved that he's exactly opposite. I never had any doubts about tenacity of a person who stirred India clear in early 90's financial mess and opened economy in face of stiff opposition. I think his soft speak and mild manners have been taken for as weakness. I do not think that there is any example in India's history of such a gamble by any PM.

The real reason may be clear in the future .

Opposition Parties

BJP - They opposed the deal just for the sake of it . This is going to go against them . The deal no doubt is good for the country.I'm really disappointed by their attitude as India's opposition party.

What happens next?

Kick start of the reforms process .Expect some disinvestments and administrative measures and if the government is bold enough some legislations as well. Remember the first substantial phase of the reforms in early 90's was carried out in flat 100 days . Government has the time to carry out reforms that it wants.

Journey of $ from Bretton Woods and Beyond

1930

till WWII - 'Begger thy neighbour' policies .Rampant devaluation of currencies to make exports cheaper .

1941 Atlanic Charter , precursor to the Bretton Woods

1945 End WWII and Brewtton Woods agreement signed

The Bretton Woods system of monetary management established the rules for commercial and financial relations among the world's major industrial states
The chief features of the Bretton Woods system were an obligation for each country to adopt a monetary policy that maintained the exchange rate of its currency within a fixed value—plus or minus one percent—in terms of gold and the ability of the IMF to bridge temporary imbalances of payments.

Throughout the war, the United States envisaged a postwar economic order in which the U.S. could penetrate markets that had been previously closed to other currency trading blocs, as well as to expand opportunities for foreign investments for U.S. corporations by removing restrictions on the international flow of capital. Without a strong European market for U.S. goods and services, most policymakers believed, the U.S. economy would be unable to sustain the prosperity it had achieved during the war.

U.S. allies—economically exhausted by the war—accepted this leadership. They needed U.S. assistance to rebuild their domestic production and to finance their international trade; indeed, they needed it to survive.

Before the war, the French and the British were realizing that they could no longer compete with U.S. industry in an open marketplace. During the 1930s, the British had created their own economic bloc to shut out U.S. goods. Churchill did not believe that he could surrender that protection after the war, so he watered down the Atlantic Charter's "free access" clause before agreeing to it.

A system of fixed exchange rates managed by a series of newly created international institutions using the U.S. dollar (which was a gold standard currency for central banks) as a reserve currency was set up.The strength of the U.S. economy, the fixed relationship of the dollar to gold ($35 an ounce), and the commitment of the U.S. government to convert dollars into gold at that price made the dollar as good as gold. In fact, the dollar was even better than gold: it earned interest and it was more flexible than gold.

After the end of World War II, the U.S. held $26 billion in gold reserves, of an estimated total of $40 billion (approx 65%).The design of the Bretton Woods System was that nations could only enforce gold convertibility on the anchor currency—the United States’ dollar. Gold convertibility enforcement was not required, but instead, allowed. Nations could forgo converting dollars to gold, and instead hold dollars. Rather than full convertibility, it provided a fixed price for sales between central banks.

1946 - Marshall Plan

The Marshall Plan was the program of massive economic aid given by the United States to favored countries in Western Europe for the rebuilding of capitalism1947-58 Implememntation of Marshall planFrom 1947 until 1958, the U.S. deliberately encouraged an outflow of dollars, and, from 1950 on, the United States ran a balance of payments deficit with the intent of providing liquidity for the international economy. From 1948 to 1954 the United States gave 16 Western European countries $17 billion in grants.

1960- Tiffin's Dilemma

In 1960 Robert Triffin noticed that holding dollars was more valuable than gold was because constant U.S. balance of payments deficits helped to keep the system liquid and fuel economic growth. What would later come to be known as Triffin's Dilemma was predicted when Triffin noted that if the U.S. failed to keep running deficits the system would lose its liquidity, not be able to keep up with the world's economic growth, and, thus, bring the system to a halt. But incurring such payment deficits also meant that, over time, the deficits would erode confidence in the dollar as the reserve currency created instability. In the 1960s and 70s, important structural changes eventually led to the breakdown of international monetary management. One change was the development of a high level of monetary interdependence. The stage was set for monetary interdependence by the return to convertibility of the Western European currencies at the end of 1958 and of the Japanese yen in 1964. Convertibility facilitated the vast expansion of international financial transactions, which deepened monetary interdependence.By 1968, the attempt to defend the dollar at a fixed peg of $35/ounce, the policy of the Eisenhower, Kennedy and Johnson administrations, had become increasingly untenable. Gold outflows from the U.S. accelerated, and despite gaining assurances from Germany and other nations to hold gold, the profligate fiscal spending of the Johnson administration had transformed the "dollar shortage" of the 1940s and 1950s into a dollar glut by the 1960s. In 1967, the IMF agreed in Rio de Janeiro to replace the tranche division set up in 1946. Special Drawing Rights were set as equal to one U.S. dollar, but were not usable for transactions other than between banks and the IMF. Nations were required to accept holding Special Drawing Rights (SDRs) equal to three times their allotment, and interest would be charged, or credited, to each nation based on their SDR holding. The original interest rate was 1.5%.

1971 - Collapse of Bretton Woods

The early 1970s, as the Vietnam War accelerated inflation, the United States as a whole began running a trade deficit (for the first time in the twentieth century). The crucial turning point was 1970, which saw U.S. gold coverage deteriorate from 55% to 22%. This, in the view of neoclassical economists, represented the point where holders of the dollar had lost faith in the ability of the U.S. to cut budget and trade deficits.In 1971 more and more dollars were being printed in Washington, then being pumped overseas, to pay for government expenditure on the military and social programs. In the first six months of 1971, assets for $22 billion fled the U.S. In response, on August 15, 1971, Nixon unilaterally imposed 90-day wage and price controls, a 10% import surcharge, and most importantly "closed the gold window," making the dollar inconvertible to gold directly, except on the open market. Unusually, this decision was made without consulting members of the international monetary system or even his own State Department, and was soon dubbed the "Nixon Shock".The shock of August 15 was followed by efforts under U.S. leadership to develop a new system of international monetary management. Throughout the fall of 1971, there was a series of multilateral and bilateral negotiations of the Group of Ten seeking to develop a new multilateral monetary system.On 17 and 18 December 1971, the Group of Ten, meeting in the Smithsonian Institution in Washington, created the Smithsonian Agreement which devalued the dollar to $38/ounce, with 2.25% trading bands, and attempted to balance the world financial system using SDRs alone. It was criticized at the time, and was by design a "temporary" agreement. It failed to impose discipline on the U.S. government, and with no other credibility mechanism in place, the pressure against the dollar in gold continued.This resulted in gold becoming a floating asset, and in 1971 it reached $44.20/ounce, in 1972 $70.30/ounce and still climbing. By 1972, currencies began abandoning even this devalued peg against the dollar, though it took a decade for all of the industrialized nations to do so. In February 1973 the Bretton Woods currency exchange markets closed, after a last-gasp devaluation of the dollar to $44/ounce, and reopened in March in a floating currency regime.

1973

The denomination of oil in dollars after the 1973 Middle East oil crisis.

1974

US manages to save $ as the only currency of trade for Oil.

1979

Second Oil Shock

1989

Emergence of deregulated global financial markets after the Cold War that made cross-border flow of funds routine.

A number of economists (e.g. Doole, Folkerts-Landau and Garber) have referred to the system of currency relations which evolved after 2001, in which currencies, particularly the Chinese renminbi (yuan), remained fixed to the US Dollar as Bretton Woods II. The argument is that a system of pegged currencies is both stable and desirable, a notion that causes considerable controversy.

"Bretton Woods II", unlike its predecessor, is not codified and does not represent any kind of a multilateral agreement. It contains the following key elements:

The United States imports considerable amounts of goods, particularly from East Asian export-oriented economies such as China, Japan and various other Southeast-Asian countries.

Since China and Japan don't have much demand for U.S.-produced goods, United States runs large trade deficits with both countries.

Under normal circumstances, trade deficits would correct themselves through depreciation of the dollar and appreciation of the yen and the renminbi. However, Chinese and Japanese governments are interested in keeping their currencies low with respect to the dollar to keep their products competitive. To achieve that, they are forced to buy large quantities of U.S. treasury securities with freshly-printed money.

Similar mechanisms work in the Eurozone with the euro and its satellite currency (Swiss franc). The Eurozone is somewhat less coupled to the U.S. economy, so the euro has been allowed to appreciate considerably with respect to the dollar.

2007

As of 2007, $ still has the largest share (65.7%) of foreign reserve holdings, with the euro some distance behind at 25.2%.However since 2000, the dollar share is falling and the euro share is rising, though the trend is very gentle.

Loosing streak for the Grand Old Party

So the loosing streak for the Congress continues………….. latest one is Karnataka which was once it’s stronghold.
It has been two years since they last won a state election!

I wonder what has happened since last two years .Of course congress has been doing all the right things at the centre .OBC reservation, NREGS, Farm loan waiver the list is quite impressive..Their governance has been top class at the centre. It is then puzzling as to why the elction gods have been at the other end for them.

I think there are no easy answers. Some of them are clear and some of them are not.

Let’s understand the Vote bank of congress
SC/ST and Muslims ...
SC/ST are moving away from the congress as they find attractive options like the BSP .BSP may not be successful outside UP , but what is pinching congress is that the votes are getting divided.
Ther muslims have not come back as they desired.

Poll and campaign management

What is amazing is the fact that vote bank of congress is not translationg into seats , whereas it is for others.
The congress has this policy of not projecting a Prime Minster or Chief Ministerial candidate.This is a tradition that has been created to mainatain the hold of the so called “ High Command” so once they win they can impose any candidate that they like. This is now proving to be counterproductive.Imagine you do a project successfully in your organisation and the booty of the success goes to someone who has not done anything.You’ll simply quit .Now apply this formula to Congress . The state level poll managers neither seems have the right power nor the incentive to perform as they are not sure that they’ll get the benefit. This needs to change . Once the right people have the right incentives the results will follow.
The campaign management seems to focus on a few people like Sonia Gandhi and Rahul and not from the state leaders. This is also having a negative impact.Local issues it seems have been forgotten and big ticket issues are being addressed which do not have much of a mass appeal.
Basically it seems that opponents are having a stronger desire than congress in campaign management.

The Umbilical Cord

The Nehru/Gandhi cord is a as much a liability as an asset as there is noone who can speak freely and fairly against the miastakes of the leadership . Hence mistakes are being repeated .

There is something in Congress favour:

The congress is hopefully learing from each failure and they may not repeat the mistake in general elections.
Anti incumbancy in states where elections are going to be conducted is in congress's favour.
Vote back has not shrunk much . However it is not translating into seats as mentioned earlier . This translation can be done if good tactics are applied.
Momentum against congress may actually turn in their favour as negative votes are cast in their favour.