HIGGS BOSON :The God Particle that could redefine God

The quest to understand the origin of the universe had begun long time back. From the bright minds of James Clerk Maxwell, Hans Christian Oersted, Michael Faraday to the genius mind of Einstein, all searched and tried to understand and unveil the mystery behind the origin of universe, its existence and the fundamental particles that led to it. A major breakthrough that came in this quest was of course made by Albert Einstein, who combining the ideas of his predecessors brought together the concepts of light, the electro magnetism, gravity and space-time to bring out his four dimensional - Theory of Relativity and later a more philosophical proposition - the Unified field theory.

According to the current understanding of physics, forces are not transmitted directly between objects, but instead are described by intermediary entities called fields. All four of the known fundamental forces are mediated by fields, which in the Standard Model of particle physics result from exchange of gauge bosons. The four fundamental forces are - Strong interaction that exists between neutrons and protons , the Electromagnetic interaction, the Weak interaction responsible for the radio activity that act on electrons governed by the  W and Z bosons and the Gravitational interaction that occurs due to the postulated exchange particle named the graviton. But the Einsteinian theory came to a pause here and the proceeding further could have only occurred by understanding the initial moments of Big Bang. Thus all the research come to a convergence to understand the basic fundamental particles formed at the Big Bang, how they gained mass and how it led to the formation of the universe. 

It was the quest for understanding this basic fundamental particle responsible for the creation of the world, the Geneva based European Centre for Nuclear Research (CERN) had set up its most ambitious and expensive experiment using the world's largest and highest-energy particle accelerator – the Large Hadron Collider. The LHC was built to particularly prove or disprove the existence of the hypothesized Higgs boson. The Higgs boson or Higgs particle is an elementary particle in the Standard Model of particle physics, named after Peter Ware Higgs, the British theoretical physicist who proposed the existence and behavior of such a particle in 1964 and Prof. Satyendra Nath Bose, the Indian physicist who provided the foundation for Bose–Einstein statistics and the theory of the Bose–Einstein condensate. Bosons are those particles that are governed by Bose–Einstein statistics. In the Standard Model, the Higgs particle is a boson, a type of particle that allows multiple identical particles to exist in the same place in the same quantum state, with no spin, electric charge, or colour charge. It is also very unstable, decaying into other particles almost immediately.

The Experiment

An experiment of this magnitude, trying to understand what happened 13.7 billion years before, could only be conducted using a highly advanced and sophisticated apparatus. Therefore the CERN designed and built the Large Hadron Collider (LHC) in collaboration with over 10,000 scientists and engineers from over 100 countries from 1998 to 2008. It was created 574 ft beneath the ground of Franco-Swiss border near Geneva, Switzerland. As of 2012 the LHC remains one of the largest and most complex experimental facilities ever built. The protons from the nuclei were accelerated through 25m diameter concrete tunnel at a speed almost close to the speed of light(3 meters per second slower than the speed of light) and was made to collide with each other. The collision becomes an exact replica of what happened during the Big Bang, reproducing the elementary particles responsible for the creation of the universe and one among the several particles produced, was expected to be the God particle – the Higgs Boson. The Higgs Boson is called the God particle because it is extremely powerful and present everywhere, and not just that, it is also very hard to find because of its very small lifetime of 1.56×10⁻²² sec.  The several experiments done prior to the LHC experiment had suggested the mass of Higgs particle to be within a range of 114 GeV/c² to 160 GeV/c². The objective of the LHC experiment was therefore to further narrow down this range and provide a more precise estimation of the mass of Higgs Boson, if it really existed. Seven particle detector experiments were constructed at the Large Hadron Collider, namely ALICE, ATLAS, CMS, TOTEM, LHCb, LHCf and MoEDAL to search for the existence of Higgs Boson.

On 4 July 2012, the Compact Muon Solenoid (CMS) and the Toroidal LHC Apparatus (ATLAS) experimental teams at the Large Hadron Collider independently announced that they each confirmed the formal discovery of a previously unknown boson of mass between 125 and 127 GeV/c², whose behaviour so far has been consistent with a Standard Model Higgs boson with 99.99 percent accuracy. The LHC is further continuing its experiments so that the results could be revalidated and could be confirmed that the particle found is indeed the elusive Higgs boson. If confirmed, then the finding of Higgs boson will endorse the existence of the Higgs field that is supposed to be responsible for giving elementary particles their masses after the Big Bang, which gave shape to the universe as we know it today. If that happens, then the year 2012 will go down as the greatest year in the history of Sciences for providing the major breakthrough after Einstein, unraveling the mysteries of the creation and the existence of the Universe. Thus Higgs Boson could turn out to be the God particle that redefined God.

The Quagmire State of Indian Economy - A case of Economic Mismanagement and Policy Paralysis

".. During a recent breakfast with an investor visiting Mumbai from a large western fund, the conversation quickly turned to the question of the moment: what ails India?. “On every indicator we look at, there is a red flag,” he said, before adding with a wry smile: “This country is close to becoming the Greece of Asia.”.. " - James Crabtree, The Financial Times, May 15, 2012.

Ever since the Sovereign Debt Crisis in Europe, it has been difficult times for the Indian Economy. Dr. Kaushik Basu, the Chief Economic Advisor to the Government of India, in a recent interview with journalist Karan Thapar admitted that "Its not a pretty picture". A recent article that came in 'The Economist' said "Farewell to Incredible India" (June 9, 2012). The GDP has fallen to 5.3%, the IIP growth rate has slowed down to 0.1%, Inflation rate still lingering around 9%, the Rupee has fallen to 57 per $, the Unemployment is as high as 9.4%, the Net International liability at $244.8 billion (20% hike), Government borrowing as high as Rs. 53000 Crores, burgeoning Fiscal deficits and the declining FIIs to top it up, the picture is clearly not pretty. But are these the inevitable resultants of the Global Financial turmoil or are there any other possible angles to it?

I wish to discuss on three observations I had made on the recent events in our economy.

One, the prices of petrol was hiked overnight by Rs 8, there by crossing the Rs.70 mark, in the name of decreasing Fiscal deficit to the targeted 5.1% viz reducing subsidies. But on the other hand Government gave Customs duty exemptions on gold and diamonds. We have a 967 tonnes of gold imports in this country and  would mean that the Country is set to lose close to Rs 50000 cr from these tax exemptions. Not just that, if the CAG report has to be believed, Rs 80000 cr revenue was forgone from tax exemptions in corporate sector alone, out of the Rs. 1,60,000 cr tax forgone in the recent budget. Why the Government chose not to tax the Gold - Diamond merchants to help in achieving the Fiscal deficit target, but instead taxed the common man of this country taking money out of his already shrunk pocket? It could only be called as an economic paradox!

Two, at a time when the country was strangled with 9% inflation, last season, India harvested a bumper crop of grain, an all time record of 75 million tonnes. But food grains worth hundreds of crores of Rupees went rotting in the FCI godowns in Rajastan. The Supreme Court of India observed that, “In a country where admittedly people are starving, it is a crime to waste even a single grain” to which our Prime Minister had replied that Supreme Court should not interfere itself in the matter of policy decisions. I wonder what would have prevented The government of India from distributing the excess grains through the Public Distribution System (PDS) at BPL prices which would have brought the inflation rate down?

Three, in a country which has 1/3 of world's poor, where millions survive on less than $2 a day, where 41% population live below poverty line, 40 mn living in slums, 3 mn sex workers, 12.6 mn child labors, 72 mn children without primary education, 2nd largest population of mal-nutritioned children with 4 children dying every min prone to illness, 20 cr sleeping hungry every night, 18000 farmers committing suicides an year and 35% of population living without electricity - the Government of India spend $80 million on Chandrayaan 1 for collecting rock samples and to find traces of water on moon surface! Chandrayaan which was supposedly a two year project, had to be called off after a mere 312 days. I wish had the Government concentrated more on building basic infrastructure, like building more storage facility for food grains, building better roads, providing water supply facilities, rather than going to moon and search for the possibility of water traces, would have helped in the country and its poor majority people in these difficult times.

From the above three observations, it gets pretty clear that for the situation India is in now, the policies of the Government of India is equally responsible along with the unfortunate world economic situation. With no major reforms going on and those promised - The Banking,Pension & Insurance(BPI) Reforms Bill, the FDI in Retail, the Goods and Services Tax (GST), the General Tax Code (GTC) - still on hold, the Government is going through a severe policy paralysis. On top of this, the untimely announcement by the Government of India for the retrospective amendment of tax and General Anti - Avoidance Rule (GAAR) to prevent the entry of money through the Mauritius route, has lead to lack of confidence of investors on India and resulted in the flight of capital from India, which in turn has caused the unprecedented downfall of Rupee. If the words of Dr. Kaushik Basu could be believed then there is no scope for any big ticket policy measures from the UPA-II Government till 2014, which means things could go worse. Thus the dirty picture we are seeing of our Economy in the recent times cannot be solely blamed on the turbulance in the World Economy but is also a case of economic mismanagement and still on going policy paralysis of the UPA-II Government. Its time for the Government to wake up and invoke the 'animal spirits' in the Economy, through strong and credible policy decisions otherwise India's wonder story will be over before we even reach 2020.

The Genesis of European Economic Crisis and its Impacts on India

The fear of an economic crisis arising from the burgeoning sovereign debts in some of the European countries developed during the late half of 2009 and this fear turned to a reality in the early half of 2010 that took the shape of what we know today as the European Sovereign Debt Crisis. Sovereign debt crisis means that the sovereign government’s borrowing from the domestic and external markets is in excess of its capacity to repay, resulting in loan defaults. In such situation the countries under trouble will require bailout packages from other countries or institutions such as IMF.

The countries caught up in this crisis were Portugal, Italy, Greece and Spain (known as PIGS). The economic activities of these countries came under the intense scrutiny from the international investment community, in the early 2010, with the threat of Sovereign default lurking around the corner. The crisis occurred as an aftermath of the Global Recession. The European governments had to introduce various financial stimulus packages to confront the recession. The Government expenditure on public job creation, pensions, social benefits etc in these countries took gargantuan proportions to support these packages. Governments were forced to borrow heavily to support these financial stimulus packages, generating high fiscal deficits. The government of PIGS nations, in the panic of recession, thus mopped up huge debt.

The Genesis of the Crisis

Greece was the epicenter of the crisis. The shambolic state of affairs in Greece, which was known to ‘live beyond its means’, was the major reason behind the crisis. The successive Governments in Greece till 2008 resorted to high Government spending which led to the situation of high budget and current account deficits. But the Governments concealed the real situation by manipulating with its deficit figures. From 2001 to 2008, the reported budget deficit of Greece averaged 5% per year and the current account deficit averaged at 9% per year. Several international rating agencies mislead the international community by high rating the Greek bonds. 

But soon the world came to know about the real condition of the Greek economy. The new socialist government in Greece, led by Prime Minister George Papandreou released the revised estimates of the Government Budget Deficit during late 2009. The revised estimates showed the budget deficit to be a whopping 12.7% of the GDP, when the previous estimate was only 6.7% of GDP. Greece held external debt to the tune of $236 billion and was unable to continue making their interest payments. Subsequently three major credit rating agencies downgraded the Greek  bonds and investors lost their confidence on Greek economy. A $1 trillion rescue package from the EU and the IMF was agreed upon in Brussels in May 2010.

Greece was not alone in this quagmire. The situations of other European economies like Italy, Portugal and Spain also surfaced. All these countries faced a roll-over risk. That is they had debts mainly comprising of short term maturity, and hence the amount to be rolled over was large, that aggravated the crisis.

Consequences

The crisis considerably affected the growth of the PIGS countries. The GDP of all the PIGS countries showed a steady decline from 2009 to 2011.

The GDP (in $ bn) of the PIGS countries from 2005-2011

Being the common currency for the entire European Union, the debt crisis had immediate impact on the Euro. The value of Euro fell drastically since 2009. Most of the Currency traders feared that some Exchange Rate countries with large budget deficits might be tempted to leave Euro. If it happens, that is if a country leaves the European Union, it could allow its currency to fall in value and there by improve their monetary situation. But it would cause huge ruptures in the financial markets as the investors would fear other nations might follow this and it could potentially lead to the breakup of the European Union itself.

U.S. / Euro Foreign Exchange Rate

The steady fall in the Euro and the weakening dollar due to the Global recession and the fear of a possible double-dip recession in U.S. all directly affected the gold prices. Investors saw Gold as a safer investment in this difficult economic situation and hence started to invest on gold. The high demand for gold resulted in a hike in the Gold price. The average gold price went up steadily since 2008 and this hike got accelerated since 2009 when the crisis in Europe was revealed.

The Greek crisis has also affected the Global banking system, as many of the Global major banks had invested in the Debt instruments issued by the Greece government. This ultimately affected the ordinary investors or the people who own their shares through pension funds. It also affected the common tax payers of the other Euro zone countries, as they have agreed to help the countries in crisis and hence the tax payers of these countries have to pay more taxes in order to share a part of Greece’s burden.

Impact of the Crisis on India

India has out-performed other economies during this period of crisis. The major reason for this is that the Indian economy is not much exposed to the European economy as it is to the U.S. economy. Indian economy is far less dependent on its trade with Europe. Indian IT companies have lower exposure to European clients and hence were not majorly affected by the crisis. The software receipts were $11.3 billion in Apr-Jun 2008 which came down only to $10.6 billion which is very less as compared with the impact crisis had on IT in other economies To understand the real impact of the European debt crisis on the Indian Economy, we need to check the major Macro Economic indicators of India and see if there were any significant impacts on it during the period of the crisis.

Impact on growth

The Sovereign debt crisis in Europe did not have much impact on the growth rate of India. The Indian economy continued to grow even during the crisis period. The indicators of growth, the Index of Industrial Production (IIP) and the Gross Domestic Product (GDP) did not show any decline during the period of the crisis, i.e. from 2009 onwards.

Impact on Trade

The European Union accounts for nearly 21% of India’s total export and out of that the exports to Greece, Spain, Portugal and Italy constitute only 4%. Since the Indian exports to PIGS are very low, the crisis did not have any impact on it. India’s major exports to EU are textiles, pharmacy products, gems which were not much affected by the crisis. Hence neither the Exports nor the imports show any decline during the crisis period from 2009, showing no impact of the crisis on India’s Trade.

Impact on Foreign Investments

The international investors lost their trust on the European economy owing to the crisis and hence majority of the FII and other individual investors chose Indian market to invest as it showed stability in the economy even at the adverse time of the crisis. The Foreign Direct and Portfolio investments showed a steady rise since 2008-09 and continued its rise in 2009-10. Though there was a dip in the Portfolio investments in India at the time of the Global recession but it is notable that the Direct Investments was stable throughout the period.

Impact on the Forex Reserves

India is sitting comfortably on a high Forex reserve that could absorb any shock from outside on the Indian economy. It could be seen that there was a dip in the Forex reserves of India at the time of the Global recession. But during the period of the European Crisis, the Forex reserves were steady and showed an upward trend.

Conclusion

The European economic crisis was a Government driven crisis than a market failure. It occurred due to the shambolic state of affairs that existed in European countries, the extravagant Government spending and abysmal management of funds. The Governments were found to be in a quandary at the time when the crisis emerged. Hence the Governments tried to manipulate with the numbers to hide the reality. This took long time for the world to understand the real situation. This highly condemnable act of the Governments to hide the reality about their true economic situation has raised serious questions about ethics in economics.

The investment agencies also played a part in misleading the investors into investing in the government bonds of Greece. Greece and Europe was majorly hit because good part of the Government debt was held by foreign institutions. On top of that, all these countries faced a roll-over risk as they had debts mainly comprising of short term maturity, and hence the amount to be rolled over was large.

Though the crisis had a major impact on the world economy, it could not cause much an impact on the Indian economy. The major reasons Indian economy has not had a direct impact of the crisis are the fewer linkages it has with European economy and the highly cautious approach that the Indian monetary authorities have shown in managing the economy right from the time of the Global Recession. Hence the economic growth, the foreign trade, the foreign investments and the Forex reserves of India did not show any signs of decline during the crisis period. The better performance of the Indian economy has increased the belief of the investors on the stability of the Indian economy, which was evident in the steady rise in the Investment inflows into the country at the time of the European economic crisis. Hence the crisis has only provided an opportunity to India in proving its economic stability and credibility.

The lessons learned from the European Debt Crisis are the following:

• Governments should not go in pursuit of Economic development at the cost of high fiscal deficit.
• Governments should not manipulate with the numbers and try to hide the reality about the economic condition that exists in their country.
• Governments should not be too much dependent on foreign institution in raising their funds.
• Governments should not hold debts which are mainly of short term maturity, since it can cause roll-over risk, leading to fiscal crisis
• The investment agencies should not try to mislead the investors in making their investment decisions.
• The failure of the Credit rating agencies in discovering the correct fiscal positions of countries may prove highly costly to all entities associated with them. Hence the credit rating agencies should be highly cautious in making their ratings and should ensure their credibility.

Thus Governments, Investment agencies, Credit rating agencies all have to maintain economic prudence otherwise the price for any mismanagement from them have to be paid by the common man.

References

1. Bajpai, Nirupam. 2011. “Global Financial Crisis, its Impacts on India and the Policy Response”, Working Paper No.5, Working Paper Series, Columbia Global Centers.

2. European Commission. 2009. “Economic Crisis in Europe: Cause, Consequences and Responses”. European Commission Report.

3. Reddy, T. Koti. 2011. “Greek Crisis and its Impact on the World Economy”, IBS, Hyderabad.

4. Zandstra, Deborah. 2011. “The European Sovereign Debt Crisis and its Evolving Resolution”, Capital Markets Law Journal, Vol.6, No.3. pp. 285-316.