governance, political economy, institutional development and economic regulation

Darning India’s stressed social fabric

October 18, 2018

Darning

Even as the #MeToo onslaught against M.J. Akbar ground to an interim conclusion with his resignation from the council of ministers, we have before us the case of a Uttar Pradesh politician’s son who felt it necessary to openly brandish his pistol, to bolster his stature, in an argument during the wee hours of the morning with a couple, in the front porch of a 5 star hotel in New Delhi- with hotel security paralysed into submissive immobility.

Delhi Police shines

man with gun

To their credit, the Delhi Police took cognisance of social media clips of the incident, which went viral and booked the errant princeling, who is on the run. But it does illustrate the massive gulf between public expectations from the rule of law and the reality of governance standards.

Delhi a liberal island in North India

Delhi has rocked in the recent past to the liberal tunes of the “privacy” debate; gay rights and now sexual harassment. This frisson of excitement peters out within a 30 km radius around the capital. Lucknow, barely 530 odd kilometres to its east, thrums instead to the beat of basics – protection of property, life and liberty and freedom for the girl child and women which is severely limited by social norms.

Even communist, rationalist Kerala – “Gods own country” does a right turn to social conservatism

There is no good reason why social conservatism – measured by the degree of freedom granted by society to the girl child or women – continues to prevail so pervasively. Consider the adverse public reaction to a judicial decision to permit the entry of women into the Sabarimala Temple in “communist” Kerala. Our colonial heritage which still binds us down irretrievably to the past must be fingered. Traditional identities are by definition regressive in a society which was deeply hierarchical, tainted by inequity, patriarchal and by modern standards, abusive of human rights, as in the case of caste or the status of women. The Raj merely reinforced these fault lines – to its benefit.

When will we get rid of traditional identities and the colonial artifice which magnifies them?

The wonder is that we have willingly accepted a continuance of visible public discrimination – the subversive instrument of submission used by Monarchs everywhere to separate themselves and the elite from the hoi polloi. President Trump was casually “disrespectful” of the elaborate formality around meeting the Queen of England, earlier this year, with a reason. He wanted to show to the world that He and the United States were numero uno and not Her Majesty.

We are yet to have our Trump moment. We reflect our cloistered and submissive thinking when the President of India continues to ceremonially ride in a carriage designed for the Imperial Goras (Colonial white folk) and lives and works out of a palace (Rashtrapati Bhawan) every piece of which, right down to its liveried footmen and the horse mounted guards, evoke the stilted contrivances of the Raj?

President

Wouldn’t it be wise for the President to move into a bungalow within the estate and turn the Palace over to some other worthy public purpose – a library; a hospital or even a high end boutique hotel managed by a private hotel chain? In the process the government could earn some money. This is one disinvestment the government should not ignore.

Monetise public land assets to fund the budget deficit

Ditto for the vast amounts of land with military cantonments and the railways. Monetising land not only provides revenue, it also shakes government out of the stupor of living in the vast, cavernous past of colonial splendour. Your style of living determines who you become. The more politicians and bureaucrats live behind high walls, the more remote they become from the push and shove of the daily life of a citizen.

There are three arbiters of a modern, free society which should be accessible to any citizen.

Needed – A fiercely “uncaged” police force

First, a fiercely independent police force – segregated functionally into border management; specialised armed aid to local police; crime prevention and detection; intelligence; local armed police for law and order duties and traffic police in metros. Each of these police forces must have independent cadres to ensure specialisation and functional separation.  Accountability to parliament must be through an apex police management board consisting of politicians from the ruling party; representatives of the opposition parties; civilian security advisors and civil society representatives. Day to day management must be left entirely to the police bureaucracy.

Needed – An efficient judiciary

The second arbiter of freedom is the judiciary. Here the tenets of independence are better embedded. But accountability and the processes by which judges get appointed need to be more transparent as does internal oversight to improve the credibility of the lower judiciary. Establishing an Indian Judicial Service is highly desirable to standardise the quality of justice and improve judicial administration.

Needed – An empowered civil society

The third arbiter of freedom is civil society. This segment has overtaken the media in being fundamental to preserving freedom. Technology has decentralised the power to report news and express opinions. Media is now just one element of the broader coalition of civil society actors who act as a check on mandate creep by the State and can enhance the performance of all three levels of government. Open information systems and transparent, participative processes are the life blood of civil society. We are very far from this goal and are actually regressing.

Needed – Professional armed forces focused only on external security threats 

There is a fourth element which is foundational to the efficient discharge of sovereign functions. This is the armed forces which defend national interest when required; guard our borders in conjunction with specialised police units and come to the aid of civilian authority in emergencies.

Till recently, a strict insulation of army operations from civilian or political interference and preservation of the terms of service at an attractive level were the norm. The quid pro co was that the armed forces remain apolitical. This understanding has now broken down. The armed forces are gradually being sucked into the political rat-race and the terms of their service have deteriorated. Unless these deleterious changes are reversed we could be on the path to tin-pot dictatorship.

Deep structural reform of governance institutions

prisons

Structural reform of the government is long overdue. The graphic highlights one of the pernicious effects of poor responsiveness of public system – undertrials spend a life time in jail without being convicted or released. The long time span for realising benefits from governance reform has been a deterrent. Political stability should be an enabler for such deep governance reforms. But experience shows that reform is always thrust upon us – either by external shocks or as a response to internal political upheavals. Rarely has a period of stability generated the adrenalin required to keep the reforms process going.

Politics seems to be tearing apart the social fabric of India rather than darning the worn pieces. Sadly, when politics becomes irresponsible, better governance also means more government, not less – as Prime Minister Modi had imagined on taking charge in 2014.

Category:

Democracy, India, Judiciary and Law, Public Institutions, social liberals, social protection

1 Comment

Tagged with:

Indian agriculture – nudged out by urban bias

October 16, 2018

agri nudged out

Agriculture’s contribution to economic value addition is shrinking worldwide. But that is cold comfort for the families of 118 million small and marginal farmers in India, comprising 85 per cent of the 139 million land holdings.

Agriculture is privately owned and managed. We cannot blame our ersatz socialist past for its poor productivity —one-half in cereals and one-fourth in pulses — relative to East Asia. Not all of it has to do with the small and shrinking average size of our farm holdings — 1.15 hectares in 2011-12. In China. 62 per cent of the land holdings are less than 0.5 hectares, similar to India, where 67 per cent of land holdings are below 1 hectare.

More of the same will not work

Nor has the Narendra Modi government been deaf to the needs of the farming community. But interventions have been technocratic and humdrum. More crop per drop — drip irrigation is good for conserving water and its sustainable use in water-starved India — but it has no teeth to push farmers to invest in it. Why bother when canal irrigation — admittedly available only to 12 per cent of farmers — is practically free? The remaining 35 per cent with irrigated land rely on ground water where electricity is free, or nearly so.

The practice of assuring a Minimum Support Price (MSP) for agricultural produce by state procurement agencies — like all other cost plus interventions — also works against farmers becoming more efficient. Enhancing the use of soil testing to optimise the use of chemicals is academic unless it is linked to how much fertiliser a farmer can get at subsidised rates.

Digitising agri markets is good but liberalising them would be better

Fourteen state governments have responded to the Centre’s nudge to digitise following Karnataka’s lead in adopting an e-trading platform for agricultural produce for better price discovery. Sadly, of the 2,477 Agricultural Produce Markets (APMs) with 4,843 sub-yards, less than 10 per cent are reported to have implemented the scheme.

Liberalising agricultural trading is critical. APMs are inefficient because farmers have to sell their produce through them. A model Central legislation in 2017 encouraged states to exempt vegetables and fruit from the monopsony of the APMs; reduce the tax levied by APMs and cap the commission charged by licensed agents to two per cent for non-perishable produce. Only Maharashtra has exempted fruits and vegetables. States are reluctant to dilute the monopsony powers of the APMs or to decartelise licensed commission agents.

Ghettoising agriculture by walling off the uneasy, informal social compact between kulaks, small farmers and agri workers is politically wise but kicks the efficiency can down the road

Change in agriculture is in the slow lane. Political economy considerations advocate leaving farmers, as a group, undisturbed to settle their affairs internally — an approach close to walling off or ghettoising the ungovernable. Unfortunately, this means continuing the package of subsidies which benefit larger farmers. These subsidies — purchase above market rates; fertilisers supplied at below market rates; electricity supplied at below cost; canal water supplied at below cost, even the fixed cost — together account for one per cent of GDP or around Rs 1.7 trillion. If interest subventions and loan write-offs are included, this amount would double. The real problem is not the volume of subsidy but how poorly it is targeted. Subsidies benefit only 25 per cent of farmers — the larger ones with political power.

Target human capital development of small and marginal farmers to get 100 million workers off the land.

agri edu land holdings wise

Two key initiatives can help without wrecking the delicate political economy compact or enhancing the subsidy further. First, rural education levels need to be enhanced. Shockingly, 30 per cent of farmers, across all classes of holdings — including large farmers — are illiterate. Only 23 per cent have studied up to Class 5 and a similar proportion up to secondary level. Given our poor education outcomes, this leaves three-fourths of farmers unable to acquire the basic STEM (science, technology, engineering and math) skills to work with and extract efficiency from the digitised machine age we are now entering.

Farm incomes can be doubled if we get around 100 million workers off the land and into industrial occupations. But this will not happen unless rapid human capital development strategies are delivered to small and marginal farmers. Educating them better can free them being dependent on farm incomes and reduce inequality.

Create islands of private sector led value chain integration from production to branded retail sale – efficiency enhancement, better quality an better realisations.

Second, most small and marginal farmers miss out on selling their produce at the MSP to a state procurer, particularly when there is a glut of supply and prices are low. Only around one-third of agricultural produce is currently procured by state entities, which is then fed into the public distribution system with a subsidy of more than 90 per cent on cost or released into the market to stabilise food prices.

Production, procurement and warehousing, processing and retail supply are all segregated segments of the value chain today. Bundling all these activities under one management can enhance efficiency. Consider that the cost of crop purchase (what farmers earn) in the total cost of food supplied through the public system has reduced from 71 per cent in 2001 to 67 per cent in 2018, even as the share of the procurement and distribution operations has increased from 29 per cent to 33 per cent.

The food subsidy estimate of Rs 1.7 trillion in 2019 includes the cost of around 33 per cent on account of waste in storage and transportation. This is the efficiency gap which can be extracted by bringing in large corporate private players with deep pockets to procure agricultural produce from small and marginal farmers at the MSP. The higher cost of purchase — around 15 per cent — versus the market cost, can be more than offset by efficiencies in storage, transport cost and better realisation from processing and branded retail supply directly into the open market.

The efficiency effects of the 1991 industrial reforms have tapered off. Why ignore low hanging fruit in agriculture?

grapes

The growth benefits from the 1991 economic reforms in industry and services are petering out. Why ignore the low hanging fruit in agriculture? Indonesian agriculture grows annually at three per cent, or at 70 per cent of the GDP growth rate (five per cent). Indian agriculture grows annually at 2.5 per cent, or at one-third of the GDP growth rate (7.4 per cent). We are missing out on 0.2 per cent of GDP growth and higher incomes for 200 million poor farmers.

Adapted from the authors opinion piece in the Asian Age, October 16, 2018 http://www.asianage.com/opinion/columnists/161018/doubling-farm-incomes-why-change-is-still-slow.html 

Category:

Economy, India, politics, poverty

Leave a comment

Tagged with:

IL&FS Robber Baron of India’s gilded age

October 9, 2018

NBFC Asset Quality RBI

India is deservedly an “emerging market”. Information asymmetries are extreme and caveat emptor rules, making investment riskier than it should be. The rapid implosion of the Infrastructure Leasing and Financial Services (IL&FS) — a private group — bears this out.

Opaque financials

First, consider that no outsider knows how many subsidiary companies it has. Estimates vary from a low of 135 to around 350 — the latter shared by Uday Kotak/Vineet Nayyar,  the new inductees to its board appointed by the National Company Law Tribunal (NCLT). The consolidated group accounts in the annual report are of some help, but not enough.

Craven credit rating agencies

Second, Indian credit ratings seem to count for less than yesterday’s newspaper. IL&FS was proud to state in its 2017-2018 annual report that it enjoyed the highest credit ratings. But barely three months from the year’s close, when incumbent chairman and founder Ravi Parthasarthy (he built the IL&FS brand from 1989) resigned in July 2018, all three rating agencies rushed to protect their credibility by downgrading the outstanding debt in August. Today, it has junk bond status. Why has the Securities and Exchange Board of India not proceeded to penalise all three rating agencies for deliberately misleading investors?

Clueless, complicit & unrepentant “marquee” independent directors 

Third, venerable “names” on the IL&FS board apparently added far less value than the compensation they drew (admittedly small by the standards of Indian corporates) as nominee and independent directors. Not one of them has had the decency to say sorry by refunding the compensation they received from 2014 onwards. By then all of them were guilty of neglecting the public interest and the interest of minority shareholders.

Public funds for private wealth

Fourth, consider also how closely we resemble China in the opaque, patrimonial use of state power.  IL&FS was not even a public limited company. In retrospect, it is highly unusual that government financial institutions, as a group, were the largest shareholders of a private limited company — with no market signals to go by except the credit rating and the “insider information” that their nominee directors had on its sustainability or health.

Government financial entities – Serve private interests

Just like in China, where public entities boost private profits, the Life Insurance Corporation of India (LIC), a public sector insurer, with assets in excess of Rs 25 trillion, chose to become IL&FS’ equity investor with a 25.3 per cent share. In 2015, when the board discussed selling out to a strategic investor, LIC valued its shareholding at Rs 32.5 billion (Rs 1,000 per share). The market feedback for the share value was Rs 17.85 billion at Rs 550 per share. LIC refused to sell. Today they would be lucky if they get Rs 0.3 billion (face value of Rs 10 per share). Their myopia wrote down the value of their investment by Rs 17 billion in three years. Will the top investment manager in LIC be sacked? Not likely.

Other kindly public sector entities also shored up the equity capital of IL&FS. State Bank of India (6.4 per cent); Central Bank of India, one of the 11 scheduled commercial banks under the Reserve Bank of India’s Prompt Correct Action list (7.7 per cent) and UTI ULIP Plan (0.8 per cent). Together they amount to 40 per cent of the equity in IL&FS.

Hubris & implicit government support made Parthasarthy and Sankran hang in there longer than was prudent 

Look out notice

Fallen icons are easy to drag through the mud especially when they hang on beyond their time. Larsen & Toubro (L&T)is another private giant in the infrastructure space with the banyan tree. But to its credit it is run as a very tight ship with a diversified management cadre, low debt leverage and a massive pipeline of projects – a shining beacon of what professional management can achieve even in India where family owned businesses rule the roost. A quick take over by L&T could reassure financial markets.

In it’s heyday, IL&FS too was a private company with chutzpah — the darling of the government and multilateral agencies; a brand leader in professional management and financial innovation and the flag bearer of the 1990s’ financial revolution of leveraging government resources with private capital and management.

ORIX ILFS

Even the government was persuaded. The 12th Five-Year Plan (2012-17),  which was prematurely junked in 2015 by the Narendra Modi government, assumed a never-before share of 48 per cent from private investment. Actual private investment in the 11th Five Year plan was just 36 per cent. Since then reality has dulled this mirage.

Satyam Computers redux a decade later: NCLT replaces the board in public interest

The National Company Law Tribunal, persuaded by consistent default on debt repayments, appointed a new board on October 1, 2018, under Section 242 of the Companies Act 2013. Similar action was taken in the case of Satyam Computers in January 2009, when its chairman courageously, admitted deliberate accounting fraud and took responsibility. Deepak Parekh, the go-to banker for all seasons of the time and financial entrepreneur (HDFC) helmed the new Satyam board then just as Uday Kotak, India’s most respected banker today, now helms IL&FS.

Kotak

Vineet Nayyar, a retired babu and subsequent corporate veteran, is vice-chair. He is a Mahindra insider. He was an inductee into Satyam and become vice-chairman of Mahindra Tech, the company which absorbed Satyam in 2013. Wikipedia lists him as also being a director of Kotak Mahindra Old Mutual Life Insurance.

The new management has been quick to reassure investors that the value in IL&FS shares will not be allowed to be eroded. These are heroic sentiments. But savvy investors are unlikely to be reassured till IL&FS, a widely-dispersed holding company, with a finger, an arm or a leg in virtually every segment of the infrastructure business, is cut up and sold. Secretary, Department of Economic Affairs assesses a 9 month period for resolution. Politically it is sensible to kick the can down the road till after the general elections in May 2019. But the interest on the outstanding debt of around Rs 1.3 trillion will mount over this period. Continuing defaults on short term debt (medium term debt is just around 30 per cent of total debt) and inability to refinance will freeze operations.

Satyam was saved by White Knight Tech Mahindra taking over within 3 months 

Satyam

Strategic disinvestment worked in the case of Satyam because Mahindra & Mahindra stepped in within a few months. This seems unlikely in the case of IL&FS. Infrastructure is in the doldrums. State and national elections will engross the public mindspace over the next nine months, making it tough for the government to be seen as openly helping a private limited company revive. Also, the viability of the business is suspect. The good news is that under the morass of linked IL&FS companies, just 11 subsidiaries constitute around two-thirds of the net assets and around 50 have a similar share in profits/losses — a tighter restructuring task though by no means easier.

Ravi Parthasarthy and Hari Sankaran, his faithful second-in-command of long standing, are being hounded today by officialdom, which bares its fangs only after the fact. But the future is sure to recognise them as India’s very own “robber barons” in the American mould, like Vanderbilt, Drew, Crocker and Morgan, who shunned convention and used a toxic fusion of privileged access to state power, private finance and infrastructure investment into private engines of economic growth.

But whoever stalks the Rs 12 billion worth, chic, open-plan, fish-bowl interior of the IL&FS head office at Bandra Kurla – a monument to corporate ebullience – is unlikely to have quite the same spring and elan as the original founders and their closely knit management team. A pity it all had to end this way.

Adapted from the author’s opinion piece in The Asian Age, October 9, 2018 http://www.asianage.com/opinion/columnists/091018/ilfs-emerging-indias-very-own-robber-baron.html

 

Category:

Business, corruption, Economy, India, Infrastructure

Leave a comment

Tagged with:

Gandhism – ethics? or just good politics.

October 2, 2018

Gandhi South Africa

Over 125 years ago, in May 1893, a diminutive, young lawyer boarded a first-class train compartment at Durban on his way to his new workplace in Pretoria, South Africa. At Pietermaritzburg, South Africa, in the middle of the chilly night, over 500 km short of his destination, he was evicted. He had a valid ticket. But he was an Indian and brown as a berry. He was ejected when an on-boarding white passenger complained about sharing the compartment with a coloured person.

An Indian out of sorts with apartheid

Oddly, he took this incident badly. Being an Indian – he was then just over 23 — he should have been accustomed to the pervasive, invisible barriers of caste, race and class back home, which dictated what you ate, with whom and even how you behaved, or the clothes you wore.

Perhaps young Mohandas Karamchand Gandhi had wrongly assumed the extent of egalitarian “protection” that was afforded by a British passport. Perhaps he, like the rest of his colonised brethren, also suffered from the Stockholm syndrome — where your tormentor seems like your benefactor. Perhaps it was the shock of his fall from grace. In India, Gandhi was an upper caste, educated bania, from a family of well-off court officials in Gujarat. In South Africa, he was just another coloured man in a suit. That must have hurt.

Non-violent resistance to institutionalised injustice and inequality

He took the incident personally and resolved to fight injustice, racism and inequality. Using the law to fight repression and inequity proved tortuous and time-consuming. Incremental change was not his style. On his return home in 1915, now suitably attired in turban and dhoti, he launched the largest public contact programme ever, and incubated his workbook of ethical, non-violent disobedience to fight unjust laws. So how enduring is his legacy?

Gandhi - India

Gandhism – out of sync with the 21st century

Gandhian values sound decidedly quirky as personal and institutional traits in the modern world. Austerity, simplicity, non-violence, autonomous, self-sufficient village republics all appear like “loser” values and institutions — the default options available to the weak and the poor, not the preferred options of winners.

Globalisation is all about integration and economies of scale, not self-sufficiency. The technological frontier is leading us towards unprecedented levels of centralisation of information and economic power. Trust as a value, in a globalised world, becomes peripheral to agreements and contracts which are justiciable. We are tweaking nature for enhancing well-being, reversing ageing, preventing disease and death and increasing productivity. Cities are increasingly bigger, higher and more densely populated — the engines of change providing the needed scale and network effects.

Violence is a collateral consequence of rapid change, fragile social contracts and the anonymity of ordinary lives. Between nations and civilisations, peace is defined as the absence of war — tenuously kept at bay by carefully balanced armies or nuclear deterrents assuring mutual annihilation.

Politics and ethics have never mixed well. Often high morality and religion are the cause, not the salve for war and violence. Nathuram Godse was no ordinary assassin. To this misguided man, the physical annihilation of the Mahatma was akin to preserving the future of India, which had already suffered the body-blow of Partition in 1947. Maoist, restive tribal communities and Kashmiri militants are all merely the latest in a long line of communities who similarly respond violently to a perceived violation by the State of their core beliefs or autonomy.

Gandhism – tools for resisting State repression

What place could there be in this organised mayhem of modern existence for the simplistic beliefs of Mahatma Gandhi? Could a “Gandhi” be born today? Would he/she resonate with an India which is no longer fragmented, famine-ridden or colonised?

Gandhi inspired Nelson Mandela and Martin Luther King Jr. But both were leaders of marginalised communities, fighting repression at the national level. In India, the popular revulsion against grand corruption, waste and indecisiveness, under the second United Progressive Alliance government of 2009-2014, resulted in the birth of a fledgling party – the Aam Aadmi Party (AAP), led by Arvind Kejriwal. It pledged to restore probity in public affairs, committed to living close to the people they served and to remain accountable via decentralised, participative  decision-making mechanisms. Its leaders shunned the trademark cotton khadi vestments of the independence movement — the hallmark of Indian politicians posturing to be one with the people.

Anna hazare

Mr Kejriwal, on becoming chief minister of Delhi courtesy a landslide victory in 2015, attended the President’s formal “At Home” reception on Republic Day in rubber sandals, a pullover and his trade-mark muffler. They outdid the Communists (remember rumpled trade unionist George Fernandes?) at their own game. The AAP even found a mascot — a Gandhi clone in Anna Hazare — a provincial, social activist, prone to using the Gandhian tactic of “fast-unto-death” to persuade governments into ethical action — in this case to constitute an ombudsman. Seven years later, India still doesn’t have an ombudsman. The AAP and Anna Hazare have since fallen out because of asymmetric political objectives, and political Gandhism lies in tatters.

Quintessential Gandhi – the poverty filter

Gandhi poverty

The Gandhian principle most successfully used in India requires that no State decision is taken that does not benefit the poorest person. Despite rising inequality, especially since 1992, high growth rates have diluted the extent of poverty. The headcount of those with incomes up to $1.9 per day (in 2011 constant terms) declined from 55 per cent in 1983 to 46 per cent by 1993, and then fell rapidly to 21 per cent by 2011. By 2020, it is expected to decline to nine per cent.

Firing on multiple fronts, the Narendra Modi government is working to rapidly reduce the extent of multi-dimensional poverty with improved public service delivery by 2030. The good news is that these services are increasingly universally available to all communities, based on economic criteria.

Paternalistic democracy – India’s democratic choice

Bapu would have liked that. He liked diverse but harmonious, well-knit, disciplined communities, quite similar to China’s model of “people’s democracy”. Gandhiji, Jawaharlal Nehru and Indira Gandhi were paternalistic democrats, as is Prime Minister Modi. This leadership style will endure. It resonates well with our ethos of “democracy with Indian characteristics”.

Gandhi fast forwarded

Gandhi fast forward

An abiding characteristic of this ethos is that we may be marginally wrong but strive to remain broadly right. Gandhiji was born on October 2, 1869. His 150th birth celebrations should have begun in October 2019 and end by October 2020. Instead, the celebrations begin in October 2018 and carry on till 2020 — marginally incorrect but broadly right.

Adapted from the authors opinion piece in the Asian Age, October 2, 2018 http://www.asianage.com/opinion/columnists/021018/serve-poorest-of-the-poor-be-a-gandhian.html

Category:

India, politics, poverty

Leave a comment

Tagged with:

Trump’s implicit advice to India

September 27, 2018

Trump UNGA

President Trump does himself no favours by going out of his way to be deviant, as he did whilst addressing the UN General Assembly yesterday. Odd that a billionaire, realty tycoon should need to resort to coarse behaviour to stroke up self-confidence. Put it down to the testosterone filled hubris of corporate American, male machismo and forget about it.

Read the intent not the optics

The truth is that behind the pugnacious façade is an “honest” politician who wants to run an administration in terms which are understandable to the average American – not just the cerebral coastal types. At the cutting edge America is exactly like President Trump – bullying deal makers who neither expect nor give any quarter except for a very good reason.

You may prefer the moralistic flailing of President Obama or the glib speak of Hillary Clinton. The former uplifts. The latter grits your teeth for the plastic political correctness of it all. Trump may merely amuse you. But don’t underestimate him. He is using America’s power in the way it should have been done, long ago, to push back on the one sided economic deals it has struck with it’s allies – political support in exchange for global security. The roue is in decline and is raking back all the cash it can muster.

So, what did President Trump tell India? If you were listening and not rolling in the aisles with laughter at POTUS’s buffoonish ways, three messages stand out if you read between the lines in the sections on democracy, socialism, immigration, sovereignty and global security.

India’s first task is to focus on removing poverty – not an easy task in the uncertain technological and economic future

First, in a Trump world, India is a massive, progressive, democratic but POOR country, which is doing a good job reducing poverty. This is important. We are not the rising super star we imagine ourselves to be. We are not competition for China. We are not even the pole in Asia – that continues to belong to Japan, Australia and the Asean countries.

Yes, that sounds terrible. But it knocks some sense into our heads. Our first and only task is to reallocate resources towards investing in removing multi-dimensional poverty which traps around 47 per cent of our population (2016 UNDP). Of these 9 per cent of Indians are trapped in extreme poverty;  an additional 19 per cent are slightly better but still poor. Most worringly 19 per cent live on the edge and can become poor via the next economic or ecological shock – drought, floods, public health disasters or just indifferent economic management.

drinking water

Focusing more on greening public investment in infrastructure, education, health and sanitation is the development narrative we need to spin, of working hard to get the world rid of poverty – sustainably, quietly and innovatively in uniquely Indian ways. Just consistent, plain, good, hard work on the plumbing by experts who have done this before. This is the first message.

The route to sustainable sovereignty is by paying your own bills & not relying on hand-outs

The second message is that America values its sovereignty and independence and is willing to secure likewise for its friends. They will not preach what you should be doing in your country or how you should be praying. That is your business. But if you violate American sovereignty through drugs, immigration or terror. America shall come after you.

This is very close to the India position except we just don’t have the reach to go after our enemies in quite the same manner as America. Can we get this power in the short run? No. Is there a sequence of investment to be followed? Yes. A sequence that first puts in world class infrastructure and human capital achievements before running for guns.

China India

In the meantime, use savvy political and diplomatic accommodation to go under the radar and if the chips are down use the N deterrent card should any country seek to abuse our sovereignty. Learn from the British, the guile and charm with which they shake hands, seemingly as friends, whilst actually transferring your full pockets into their own empty ones. That is the kind of diplomacy we need, not the gun trotting, bravura kind. And please forget about pushing for more US visas. The cheap body count model of IT servicing is dead.

If you want to stride the world stage like a colossus be ready to bear the costs

The third message is that if we want to play “big boy war games” – like Germany, France, the UK, Canada tend to, we will need to do so on your own balance sheet. Don’t expect American cash to implicitly bankroll your flag waving around the globe.

India in danger of neglecting core domestic issues in favour of glitzy, overseas media coverage and an unaffordable,  muscular, security strategy. 

India should listen carefully. Prime Minister Modi has been misled by this government’s security and diplomatic advisers into believing that selling a cardboard image of a “Strong India” to foreigners, can diffuse onto the Indian voter back home, lifting the mood. This is “Shining India” redux. And what does one gain by doing this?

We pile up debt for buying trinkets like the Rafale jets, better guns, bigger ships and bullet trains. All this at the expense of making our domestic economy truly competitive. Domestic investment has been low, not least in agriculture. We should rectify this. It is an outcome of correcting the excess financing of the post 2008 go-go years of the UPA, much of which is sitting with banks as bad loans.

Bury ego & seek large foreign institutional finance to fund structural reforms in tax and infrastructure

The fact is we need large significant budgetary and development assistance credit if we are to increase spending whilst retaining fiscal stability. This means eating humble pie and going cap in hand to the International Financial Institutions. We should have done this well before going for the big bang GST reform to provide a fiscal buffer. It is still not too late to start the discussions.

Is the government getting captive to pre-election rhetoric

Bhagwat

Unfortunately the pre-election noise is vitiating decision making. Even the Rashtriya Swayamsevak Sangh (RSS) has departed from its monkish discipline and austere style and fallen for the trappings of public office. Aping the BJP in organising lavish, mega events is likely to be detrimental to both organisations. The contagion of public office spreads faster than an ink stain. Once this seeps into the RSS, they become merely the B team of the BJP. Its strength has been the ascetic’s ability to speak truth (their version) to power. Is politicisation of the RSS the legacy Sarsangchalak Mohan Bhagwat would like to leave?

From the mouths of babes flows wisdom. In India’s case this applies to President Trump’s address yesterday. The problem is are we listening to POTUS or just hearing in his words what we want to hear.

Also available at TOI blogs, September 26, 2018 https://blogs.timesofindia.indiatimes.com/opinion-india/president-trump-on-india/

Category:

India, world affairs

Leave a comment

Tagged with:

US bringing China to heel

September 26, 2018

Trump Xi

America’s President Donald Trump is nearly halfway through his four-year term. This is when most occupants of the White House get edgy about their “legacy” — how would America remember them? It’s too expensive to launch a war and once launched even harder to bring it to an end. Making peace is a better option.

His goals are clear. First, get a peace deal from North Korea — the last of the present-day dragons to be slayed — leading to a possible Nobel Prize! After all, President Obama got his rather easily.

Second, preserve America’s mojo by enshrining himself as the “Marlboro Man” who brought China to heel. It was after all a fellow Republican, President Richard Nixon, who broke the deep freeze with China in 1972 with his visit, the “week which changed the world”. That relationship has grown to mutual benefit over the past 46 years. But every prima donna finds it hard to be upstaged by a young pretender. China accounts for 15 per cent (India is just three per cent) of world GDP versus 24 per cent for the United States. But China grows at more than double the rate of the US. By 2032, China’s GDP will be bigger than that of the US.

China no coy wall flower either in smart trade practices

China flag

Bafflingly, China has gone out of its way to be disliked. The country remains opaque and its commitment to long-nurtured international norms like the rule of law remains iffy. Admittedly, most such norms benefit the entrenched and work against outsiders, like China.

Sadly, such is the anti-Chinese sentiment stoked by China’s bulldozing ways — very reminiscent of the Ugly American, a 1958 political novel — that in Southeast Asia, India and other developing countries, while most people admire China’s successes, they would be secretly delighted to see China whipped.

Pulling up the drawbridge on trade

drawbridge

The US has chosen to impose sanctions on China by crippling its trade via high tariffs (25 per cent) on imports from China levied on a progressively wider basket of products. From $36 billion of imports in March 2018, the base was enlarged to $50 billion in August and by end-September it will further increase to $250 billion (equal to 60 per cent of Chinese exports to the US) and so on, till the Chinese cave in and start seeking an end to the trade war.

WTO trading norms adrift

This unravels all the gains made in world trade negotiations over the past three decades. The average tariff rate for WTO member countries was down to nine per cent in 2013. By then, only five economies had an average tariff rate above 15 per cent.The US accounts for around 18 per cent of China’s exports — big enough to use withdrawal of free access as a threat. China could try and find alternative markets. But it will take time. Depreciating its currency could reduce the impact of the tariffs on its exporters. But that will play into the hands of the US, which it assails for being currency manipulators.

China asserts its burgeoning economic clout

China has chosen instead to play on the front foot. It has retaliated by selecting $60 billion of imports from the US for similar tariffs. It is resolute in continuing to impose symmetric counter tariffs on US imports. But total imports from the US are only around $155 billion, versus exports of S432 billion to the US, so China’s room for imposing counter tariffs is limited.

China has a much more potent weapon. It can stop buying and start selling the $1.2 trillion of US Treasury bonds. It owns 15 per cent of the total issued by the US. This will drive down the demand for US government debt and increase US interest rates because debt products are priced using US Treasuries as a base.

Be prepared for a slump

Over time, world trade will readjust. But in the meantime, world trade will suffer at least a five per cent drop against the seven per cent growth per year it has enjoyed since 1980. Incidentally, the bulk of the incremental benefits, particularly in merchandise trade, have gone to developing countries which now have a share of 42 per cent in world trade — double their share in 2000.

The fall out of decreased capital mobility can bite the US too

Ironically, it is the US which will suffer over time. Global supply chains snake out from the US and one half its imports constitute intermediate goods which go to build US products. International credibility in honouring commercial contracts and settling disputes quickly makes it the go-to destination for capital-seeking safe havens. It has lived off its credibility for the past 43 years! The last time it ran a trade surplus was in 1975.

Despite many factories falling silent since then, the US economy has not suffered. Its open markets and investment-friendly institutions have sucked in foreign investment, creating jobs and generating economic growth. If you cut off this capital tap or make it more expensive to invest in the US, its economy will be on its knees in less than a decade.

China likely to remain on top – but remain pragmatically open to a settlement

China has the advantage that its executive decision-making is insulated from democratic noise. In the past, as during the Cultural Revolution, this resulted in horrible errors and mistakes. But President Xi Jinping’s vision of “capitalism with Chinese characteristics” is pragmatic. Trade tantrums can distract the leadership into fire-fighting. So, if the troubles persist, expect China to tone down its aloof and abrasive behaviour and seek friends abroad by playing a more sophisticated game than just stuffing open mouths with money.

A stressed China could seek to settle differences with India 

flags

Also, importantly for India, an entry point could emerge for de-escalating our border tensions with China and reset the comprehensive relationship towards more positive, collaborative ends. China, throttled by export barriers to the US, might diversify the structure of its exports, using overseas production and export units in countries with trade ties to the US. India could be one such location.

India can gain by using the slow down to fix its domestic economy 

We constitute just three per cent of world trade. Our exports are limited not by overseas demand but by our own low export competitiveness. Our main task is to make our economy really competitive. Even to benefit from transactional trading opportunities thrown up by external shocks, that back-end support needs to be in place. The Chinese are pragmatic strategists. If President Trump needs a “win” desperately they will give him one in time — pyrrhic though such a victory might be.

Adapted from the authors piece in The Asian Age, September 25, 2018 http://www.asianage.com/opinion/columnists/260918/us-china-trade-battles-to-impact-india-world.html

Category:

Economy, India, Trade, world affairs

Leave a comment

Tagged with:

Babus as default tycoons

September 25, 2018

IAS 1

Our style of governance remains “provincial”. Of course nothing wrong in that. The French, despite being the last word in art, films, fashion and style – and now fighter planes – exult in the provincial core of their culture.

The dapper President Sarkozy first became a mayor of a charming French commune – through the simple expedient of marring the Mayors niece – before becoming President of France in 2007. No Indian politician worth his salt would spend a decade in district or municipal affairs, in the hope that this would further his political career.

In politics start at the top and stay there 

No sir, we graduate from student politics directly into the Parliament in Delhi, failing which, to the state level legislatures. Consider, that a Rajasthan dynast of the BJP, now says that he never wanted to be an MLA. But daddy – a BJP big shot from the Vajpayee years, couldn’t get him a ticket for the national elections, so he suffered in a job he was never interested in. He is now open to switch to another party, if he is assured a ticket for 2019.

Ditto that for the civil service

Oddly the government – read politicos – do not consider it strange that it forces bright young appointees to Indian Administrative Service to spend one third of their careers, initially, in the minutia of provincial affairs, “fire fighting” on a daily basis, to manage the perverse outcomes poor public policy, poor delegation, systemic failure or worse, outright corruption. Once their curious minds are suitably dulled and they approach an age, when their cohorts are big names already, in academics, management or technology, they are given a chance to come to Delhi to engage in policy formulation or the State capital to try their hand at program implementation.

It does not help that the existing system for recruitment allows candidates who are approaching middle age to join as a “young” recruit to the IAS. Worse, rather than spending the first decade of their service becoming specialists in their field of choice, these unfortunates become little more than the entitled flotsam of civil administration. They arrive half-baked “by administrative design” to head departments over the heads of existing personnel, who unfortunately were “a few marks short in the UPSC exam”.

Who gains from a plaint civil service?

All this is old hat. The real question is why do such perverse incentives continue to prevail? Who gains from it? Yes, lazy, incompetent IAS officers certainly gain from a system in which having once gamed the UPSC exam, they can sit back, smile at every powerful politician, adopt a tunnel vision on the nature their job, create no ripples and wait for good fortune to promote them faster through more vacancies at the top.

But one doubts that merely making life easy for IAS officers is the real incentive. After all, this elite tribe of around 6000 officers represents just 0.1 per cent (one tenth of one per cent) of the 6 million civilian public servants in administration. The real intent seems to be to keep them captive by never encouraging them to develop marketable talents.

A bureaucrat with “connections” is better than one with options

Professionals with international demand are a dodgy bunch. Remember Raghuram Rajan, Arvind Subramanian or even the Columbia professor, distinctly uncomfortable with real life public policy management – Arvind Panagriya. They found the marginal utility of hanging on, progressively reducing, so they left. A small number of babus also leave to go on to become successful entrepreneurs or professionals abroad or in India.

A bureaucrat with options is the last thing our politicians want. They like the humid stickiness of “relationships” developed over a life time. Such people are dependable. And politicians like bringing their sticky babu relationships along with them, as they grow in importance.

A glimmer of lateral competition at the very end of this government’s tenure

To its credit, the Modi government has, at the end of its five year term, initiated what will eventually become a scaled up lateral infusion of talent. Exposing bureaucrats to competition is the right way to go. But there is also a possibility that this mechanism may remain a subtle threat to ensure slavish, bureaucratic compliance, as is widely prevalent amongst the state level cadres of administrators.

Is it fair to crush bright young minds by stuffing their mouths with faux power

It is unfair that the potential of over 100 young IAS appointees, culled from the 500,000 who take the UPSC exam every year, is systematically degraded. Of course no one forces them to join. But where else can the child of ordinary parents get the chance to become an honoured part of the empowered Indian “elite”?  It is wrong to mould those who join for a three decade long career to become feared, often despised but always subservient members of one political dispensation or the other.

IAS 2

Early specialisation within narrow work verticals can enhance professional pride

Change the system. Cadres should be recruited on a narrow basis of skills and then trained for the public workplace. District administration, for example, is not just an incubation period. It should be a life time occupation. An IAS officer interested in district management should join as a Tahsildar and aim to retire as Chairman of the State Revenue Board. Others, who prefer secretarial services, must have the requisite sector skills (secretariat administration, public finance, industrial and commercial policy, agriculture etc.) join as a Section Officer and hope to retire as Secretary. Cross fertilization between the Union and state government secretariats could work. Most likely, those good at field jobs will be useless in the Secretariat and vice versa. In the modern world “general management” is what a spouse does at home every day. You don’t need to specialise as a generalist from day one.

Stop the contagion spreading through “caretaker” top appointments in private banks

Perhaps the most egregious cases of “provincial” type appointments are visible today in the financial sector. IDBI Bank earlier, Yes Bank and the venerable ICICI Bank are now headed by babus as Chair or Vice Chair. The storied ILFS (Infrastrucure Leasing & Financial Services) – a Non Banking Finance Company, which is, could, if it is not quickly sold to Orix, Japan (an existing minority shareholder with deep pockets), also soon be in “safe” babu hands – possibly one of the many IAS officers who have passed through its hallowed portals on deputation and contributed to its debt overhang.

Babus make excellent choices as a reliable pair of hands. The problem is they also make their organisation “safe” from all risk by bringing to the desk obsessive micro management. It is fine if such “senior age” management is inflicted on publicly owned entities. But why destroy the few private sector entities we have? They are in trouble because of indulgent “independent” directors, including pliant PSU nominee directors, who represented political not public interest and an RBI which failed, till recently, to proactively regulate errant management in privately owned, listed financial companies.

Private tycoons can be regulated, “babu” tycoons capture the regulator

James Crabtree in his breezily readable book – “The Raj Billionaires”, typifies top Indian business heads as “tycoons”- with the freedom to dream big on the back of implicit “relationship” based political support with nary a thought spared for minority shareholders. Simply, replacing a corporate tycoon with a babu hoping that things will become better is like mistakenly opening a fizzy wine and them trying to cap it for a rainy day – it goes flat. There are better ways of regulatory risk management than putting your “own man” in charge – that is an undesirable and inefficient “provincial” option, out of step with good governance practices.

Also available at TOI blogs September 25, 2018 https://blogs.timesofindia.indiatimes.com/opinion-india/babus-as-default-tycoons/

Category:

bureaucracy, corruption, Democracy, Economy, India, politics

Leave a comment

Tagged with:

Electric subsidy – Haryana’s burden of riches

September 13, 2018

Khattar

Today we found the grandfatherly chief minister of Haryana Mohan Lal Khattar smiling at us out of a half-page advertisement, paid for by taxpayers, announcing an “unprecedented decision” of his government. From October 1, 2018 onwards, electricity customers consuming less than 500 kilowatt hours per month would pay between 16 to 47 per cent less to their distribution utility. The advertisement proclaims that 4 million consumers in Haryana would benefit.

Cross-subsidy will increase

So who is going to pay for this pre-election bonanza and why is it necessary? In 2017-18 the Haryana Electricity Regulatory Commission (HERC) estimated that the all-in cost of supply to a low tension (LT) consumer – low tension here refers to the voltage of supply and not the potential for aggravation – was Rs 7.25 per kWh. Compare this with the paltry existing tariff which ranges from Rs 2.70 to 5.56 per kWh, increasing progressively up to a monthly consumption of 500 kWh. At no point of consumption, till 500 KWh per month, does the utility recover its cost of supply.

Fiscal red flags may be raised

With the latest bonanza, this loss would further increase. To be sure the HERC can recover some of this loss by charging even more than the cost of supply to other consumers who use more electricity at LT or increasing the tariff for Industry which uses High Tension supply. That has been the strategy all along. But there are problems with continuing the “robbing Peter to pay Paul Robin Hood” approach to finance a utility.

So why have an Electricity Act at all if it is to be flagrantly flouted?

First, the Electricity Act 2003 enjoins regulators and utilities to decrease (not increase) cross-subsidies (meeting the loss from one by over-charging another). This is not just an issue of commercial equity that customers should be charged what it costs to serve them.

Far more important, excessive cross-subsidy can and does severely distort prices and business decisions. Those charged below market rates are prone to wasteful use. Those charged more are prone to steal, game the system (by getting multiple meters) and in the case of industry, become uncompetitive versus other producers in states with more rational tariff policies.

That Haryana’s prices are severely distorted is clear from the fact that the new reduced tariffs (Rs 2 to 4.27 per kWh up to 400 kWh and Rs 4.56 per kWh up to 500 kWh) will not even meet the utility’s cost of power purchase which was Rs 4.13 per kWh last year. Increasing rather than reducing the cross-subsidy and taking it beyond the statutory maximum limit of 20 per cent is ultra vires the objectives of Section 61 of the Electricity Act 2003.

Where are the poor in Haryana and how many are they?

Trump Village unveiled in Haryana

Waiting for goodies – A village in Haryana’s backward district Mewat renames itself as “Trump Village”. 

Second, does the average Haryana electricity consumer need the deep subsidy? The answer is a resounding no. First, the level of poverty in Haryana was one of the lowest in the country at around 11 per cent in 2011 (census data) when the national average was 22 per cent. Since then it has been a high growth economy clocking 11.5 percent per annum in current prices. Poverty in Haryana is low, possibly less than the 3 per cent red flag. Second, the average per capita income is the fifth highest (2014-15) with only Delhi which is part of the contiguous National Capital region and Chandigarh which is Haryana and Punjab’s combined capital ahead of it, along with Goa and Sikkim. Third, it is a 100 per cent electrified state which had 4.1 million electricity customers in 2007. The existing retail tariff subsidizes consumption up to 500 kWh by between 63 to 23 per cent. The new tariffs would increase the subsidy to between 72 to 35 per cent.

Has HERC lost credibility?

Why was the state government in a hurry to announce these new tariffs without any supporting announcement from the regulator? Possibly, this illustrates the current impatience with due process and cynicism around independent regulation. But more likely, this is just one in a series of pre-election bonanzas.

Haryana joins the race to the bottom of the tariff reform ladder

Can Haryana afford to waste money on poorly targeted freebies? The answer is a qualified yes. Haryana’s fiscal stability, as measured by the “revenue deficit (RD)” – the excess of current spending over revenue, is better than its immediate neighbours- Rajasthan and Punjab. Haryana’s RD was high at 2.4 per cent of gross state domestic product (GSDP) in 2015-16. But it is expected to reduce from 1.4 per cent in 2017-18 to 1.2 per cent in 2018-19. The latest subsidy bonanza may, however, upset plans to meet that target.

amrinder khattar

Comparing oranges with oranges, Haryana comes out smelling sweeter than Punjab. The latter state’s RD was 3.1 per cent in 2017-18 and an estimated 2.5 per cent in 2018-19. Rajasthan is an also-ran, with an RD of 2.4 per cent in 2017-18 and 1.9 per cent in 2018-19.

Three other non-contiguous states are worse than Haryana in 2017-18 – Assam, Kerala and Himachal Pradesh. But that still leaves 24 other states doing better than Haryana. That statistic alone should make Haryana’s combative leadership and progressive citizenry stop and re-think their fiscal allocations.

Negative messaging on reform

Even if Haryana has money to spare, subsidising electricity customers is a poorly targeted priority for its resources. It also does not speak well of party discipline and ideology since the Union government ruled by the BJP, as in Haryana, has diligently followed the fiscal stability agenda.

15th Finance Commission should penalise Haryana for poorly targeted fiscal exuberance

Fiscal exuberance in “rich” states just prior to elections needs to be penalised. One hopes the Fifteenth Finance Commission evolves a formula for penalising freebies (political gifts). The judiciary can also bell the cat as it is doing in an environment and human rights. Adding the fiscal review to the overburden of the higher judiciary is a bad option. But we may be heading there if public funds are spent with impunity for partisan benefits.s

Also available at TOI Blog, September 13, 2018 https://blogs.timesofindia.indiatimes.com/opinion-india/haryanas-burden-of-riches/

Category:

BJP, Budget, bureaucracy, Democracy, Economy, elections, Energy, India, Judiciary and Law, poverty, Public Institutions

Leave a comment

Tagged with:

#Gender & #sexuality norms #India 2018

September 10, 2018

LGBT 2

In Britain, “buggery” between consenting adults became legal in 1967. Let me hasten to assure that I use the crude term “buggery” not to mock the LGBT community. This is the physical act, defined by its antiseptic moniker “voluntary carnal intercourse against the order of nature”, which was excised from Section 377 of the Indian Penal Code (IPC), 1860, by a five-member Constitution Bench of the Supreme Court last week (Navtej Singh Johar case). Fali Nariman had argued in the Suresh Kumar Kaushal case. 2009 that the term used in the IPC was so vague that it could be interpreted to include all sexual acts which were for pleasure alone and not aimed at procreation – including fellatio, use of a condom by a hetrosexual couple and use of an artificial device by two women. All of them, per Mr Nariman, could be prosecuted. Luckily now that  transgress into privacy has ended.

The court tagged the right to choose one’s gender and sexual preferences to the expansive fundamental rights vested in our Constitution, which encourage every individual to express themselves, form like-minded communities and live enriched, free lives, albeit with reasonable restrictions.

Incremental inclusion of LGBT over a decade

Events have been moving in this direction for nearly a decade. In 2009, the Election Commission of India, under CEC Navin Chawla, encouraged voters to voluntarily register their gender as “other” rather than male or female, if it described them better. This revolutionary move was balm for the transgender community, traditionally called “hijra”, which were outlawed in the colonial period and exists today as society’s underbelly. It is easy to exclude a community legally but much tougher to excise it from social memory. Rare is the Indian parent who would risk not getting newborn children or newly-married couples blessed by hijras.

Anjali LGBT crusader

On July 2, 2009, the Delhi High Court made history by allowing the petition of Naz Foundation. It held that Section 377 of the IPC was unconstitutional. The 2011 census followed and recorded 0.5 million transgender people on a self-declaration basis.

The next milestone was the April 2013 judgment by a two-judge bench of the Supreme Court (National Legal Services Authority case) which recognised “transgenders” as a minority identity. It was the first step towards fuller state inclusion for benefits and protection. Unfortunately, the bill for enabling such rights has been under consideration since 2014 in Parliament.

Meanwhile, strongly influenced by the international narrative to actively protect individual privacy against the State or private predators, a nine-judge bench of the Supreme Court on August 24, 2017 (Puttaswamy case) ruled that individual privacy was a part of the constitutionally guaranteed fundamental rights. Using privacy as an entry point, the court also ruled that the law must not be normative on what consenting adults could do in private.

Why is the judiciary being implicitly used to make law?

Given this progressive trend, the decriminalization of Section 377 was a logical conclusion. But the lay person could well ask why adopt a tortuous, disjointed judicial process for what have been comprehensively dealt by a proactive legislation recognising first, that gender diversity is a reality and second, sexuality is a mutual choice not limited by laws or morality.

The answer is yes, these issues should be debated comprehensively and legislated on by Parliament. The judiciary has no original legislative power. It makes or unmakes law only as a default option on a petition for judicial review of whether or not a law is aligned with the basic framework of our Constitution (Keshwanand Bharati case 1973).

Electoral compulsions erode a consensus, within Parliament, on social reform with electoral gains are meagre

To be fair to Parliament, it reflects what citizens feel, think and expect. The tyranny of democracy is that it binds us to where we exist today, not where we might want to be a half century hence. History has also not helped. Rule by the Mughals, followed by the British Raj, had stymied organic social development. Alternative sexuality was hardly an issue in Ancient India. As evidence, one needs go no further than Section 282 of the Indian Penal Code, which defines “obscenity” as anything “lascivious”, appealing to “prurient interest” or which may “corrupt” or “deprave” persons and prescribes punishments for such acts or objects.

The exception to this section is revealing. Ancient monuments, their sculptures and art are exempted from prosecution under obscenity laws as are any sculptures or art meant for religious purposes. Our ancient culture and religion predates the puritanical social norms of the eighth century AD in Arabia and eighteenth century AD in Europe, which were internationalised through conquest.

Western civilisation turned the corner on including LGBT a half century ago

Europe

We are stuck in a past which is not our own. A past abandoned, even in Europe, from where we partially assimilated our prudish present. A survey by daliaresearch.com shows that six per cent Europeans identify themselves as being Lesbian-Gay-Bisexual-Transgender (LGBT). Those between 25 to 35 years are four times as likely to claim an alternative gender as compared to those above 60 years. Gender and sexual diversity is the future. But State support is crucial. In the UK, same-sex marriage is legal. But 20 per cent of LGBT have battled hate speech or worse from social conservatives.

Generating data on LGBT can improve their access to public services & make their electoral weight visible

If the European share of LGBT to total population is applied to India, we would have 70 million LGBT people. They may very well exist and if united would be a bigger vote bank than all our minorities other than the Muslims. But fear and oppression keep them in the closet. Changing the pattern of acceptable social behaviour is a long, hard struggle. Lofty judicial pronouncements change behaviour only when embedded, by law, into the lives of real people who study, marry, have or adopt children, work productively and raise families securely. This is a long haul given the current parliamentary passivity on this subject.

IIT Delhi geeks are at the frontier of change

It is endearing that 20 geeks from the Indian Institute of Technology, Delhi, an institution of eminence, are at the frontier of change. They challenged the regressive Supreme Court’s two-judge decision of December 11, 2013 (Suresh Kumar Koushal case), which had overturned the Delhi high court decision ruling that Section 377 was unconstitutional on the narrow ground that unproven harm to a small minority was not significant enough to warrant judicial intervention to curtail the legislative privilege of Parliament.

Three emerging institutional trends

The decision in the Navtej Singh Johar case last week illustrates three important trends. First, institutional collapse is not imminent in the higher judiciary. This is good news since they will have to lead social change in the face of parliamentary passivity.

Second, the Court, by coming out strongly against majoritarianism, has stirred up the political pot. This will continue to boil during the upcoming elections.

Third, failure of governance continue. Much can be done by executive action and in judicial review sanctified by the courts. Why cannot the government simply change the provision for survivor pensions for a “spouse” to “partner” as a one-time choice to be made by the pensioner? Similar changes in the definition of “family” for health insurance or social benefits can embed sexual and gender diversity deeply. Aadhaar was driven by executive zeal, and so can social reform.

Adapted from the authors Opinion Piece in The Asian Age, September 10, 2018 http://www.asianage.com/opinion/columnists/100918/377-need-a-real-change-in-state-society-norms.html

Category:

bureaucracy, crime, Democracy, India, Law and regulation

Leave a comment

Tagged with:

Tag Cloud

%d bloggers like this: