governance, political economy, institutional development and economic regulation

hypocricy 2

Graphic credit: chloesimonevaldary.com

Yasmina Reza’s God of Carnage — playing in Mumbai and Delhi — makes us laugh at ourselves by stripping bare the self-serving hypocrisy underlying socially acceptable roles. Bleeding-heart Indian social liberals would do well to see themselves in the mirror via this play.

Admittedly, we humans must get beyond our basically brutish nature. But the first step to doing this is not to be in denial about the brute within us. Narendra Modi baiters are particularly delusional about themselves.

For them Mr Modi is forever damned because of the Gujarat riots in 2002 and because he refuses to atone at the altar of “secularism” that Indira Gandhi embedded in the Constitution in 1976 along with the subsidiary altar of “socialism”.

We have, since 1990, correctly turned a Nelson’s eye to the latter as has the rest of the world. But liberals fear that both the right (Rashtriya Swayamsevak Sangh, Bharatiya Janata Party) and the left (communists), are so committed to their own political “ideology” that they aim to substitute liberal democracy with state authoritarianism.

The left has made itself redundant in India, so the real threat to liberalism is from the Modi government. The examples used to illustrate the increasingly “heavy hand” of the state are the clamp down on NGOs — Teesta Setalvad and Greenpeace; the attempt by the executive to reclaim the power to appoint higher judiciary; and current administrative practices like the “gag order” by home minister Rajnath Singh on officials hobnobbing with the press.

Are, then, Prime Minister Modi’s intentions subversive?

First, let’s consider the alleged attempt to misuse official authority to muzzle NGO critics.

Misuse of authority can only be assessed in two ways — either via the judicial process or via loss of public support, as happened resoundingly in 1977. Indira Gandhi was damned by the judicial process before being damned by the electorate post-Emergency.

In Mr Modi’s case, no adverse judicial outcome taints him. His significant popular mandate is likely to be re-endorsed in the Bihar state elections later this year. The Opposition has a majority in the Rajya Sabha and the judiciary remains generously tolerant towards public interest litigants. Both checks are working well. With respect to the “gag order”, post the RTI legislation, access to public information is institutionalised. Yes, news hounds can no longer get “breaking news” easily, but that is no great loss.

Second, when was India ever a social, liberal democracy? Mahatma Gandhi was a social liberal, like Jawaharlal Nehru and Muhammad Ali Jinnah, but the tactics he used show that the country was not. That is why he mobilised the majority via religious means — bhajans and kirtans.

By preferring Nehru as the de facto Congress leader to Jinnah (who was never much of a hard-core Muslim), the Mahatma bowed to his political assessment that the Hindu majority would not accept anyone except a co-religionist as their leader. This was good realpolitik and has been the broad political trend since Independence.

After Independence, none of the national parties — the Congress, the Janata Dal, leave alone the BJP — have ever had anyone other than a Hindu as their supreme political leader. The only recent exception is Sonia Gandhi of the Congress. But even her links into politics are exceptionally pucca, upper caste Hindu. The Communist Party of India (Marxist), which is meant to be areligious, has had only one non-Hindu — a Sikh, Harkishan Singh Surjeet — as its general secretary from 1992 to 2005.

Indians feel comfortable being led by those who are from their own social group. For national issues religion and caste are the bonding factors. For state level elections, caste is the major factor; at the village level it is sub-caste or clan. This is hardly a characteristic of a liberal democracy.

The liberal political elite do a great disservice by spinning the myth of a liberal India. A more honest assessment would be of India as a seething cauldron of competing social groups held in balance by quasi-colonial state power. Recognising oneself, as I said earlier, is the first step to reconciliation and reform.

In a democracy, numbers count. To protect itself, minorities either have to increase their numbers, as the Hispanics and blacks are doing in the US, or they have to stay below the radar while aligning broadly with the majority goals. The US, a land of immigrants, has no qualms about requiring everyone to be American — in language and in culture, such as it is. France is even less tolerant of cultural or linguistic deviance. In comparison, India adjusts to linguistic, religious and cultural diversity. But till the Hindu population is in a majority they shall dictate the music to be played, as they have done since 1947.

India has remained an “administered” democracy of the colonial style — the spirit is scarce but bells and whistles abound — albeit better administered than it was pre-Independence. Prime Minister Modi’s moves are merely a muscular rendition of what all directly elected Prime Ministers did prior to 1989. Thereafter, coalition governments diminished the stature of the Prime Minister, who, in terms of formal powers, is more powerful than the American President. Those who have been socialised only during the last two decades of “coalition dharma”, when listless governance was the norm, need not be alarmed at the vigorous use of the available constitutional powers.

Any real democracy merely reflects the norms and aspirations of the people. This is the central conundrum of the Arab Spring that ended up fanning radical Islam instead of modernising North Africa and West Asia.

Urban folks worry too much about the seeming frailty of Indian democracy. They also exaggerate the role played by the media, civil society and intelligentsia as the bulwarks against its demise. The real custodians of democracy are the enormous variety of vertically and horizontally arrayed social groups, each negotiating to safeguard its own special interests and societal norms. By their very presence they illustrate that there is a competitive market for political power in India. Unsurprisingly, as in any market, bargaining power in a democracy is with the majority. But every market has to be regulated to be efficient and equitable. That is what Parliament and the judiciary are expected to do in our system. If democracy ever dies, it is these two institutions which will be responsible, not the executive or the people of India.

Adapted from the authors article in Asian Age July 29, 2015 http://www.asianage.com/columnists/hypocrisy-socialist-liberals-635

death

Photo credit: dangerFantastic.BlogSpot.com

To everyone’s relief, the Governing Council (GC) of TERI appointed a new Director General to replace Dr. R. K. Pachauri (RKP). Seemingly, it was moved to act in response to a lower court ruling staying the operation of the findings of the Internal Complaints Committee (ICC).

The law at work…and play

The Committee findings must have damned RKP, which is why he agitated the matter in court. The stay was based on the evidenced argument that principles of natural justice were not followed by the ICC, thereby disadvantaging the respondent (RKP). Hearings on the issue will continue. But the practical outcome was that RKP resumed work. He had voluntarily proceeded on leave, when the criminal complaint was lodged. There was no legal bar on his rejoining albeit, rather awkwardly, having to operate away from the Head Office and the Gwal Pahari campus, where the complainant works.

Corporate honchos call the shots

The GC which includes luminaries from the business word, academia and government had little choice but to end this Kafkaesque comedy by choosing a DG to take operational control of the institution. In doing so they wisely acted in compliance with the highest standards of corporate governance. No employee should even potentially be able to directly or indirectly use her position to compromise the due process of law.

A professional and a gentleman

Their choice of the new DG-Dr. Ajay Mathur, an ex-senior employee of TERI, is impeccable. A multi-talented engineer (like RKP) turned environmental and energy efficiency policy wonk, with a stellar track record- he has the advantage of straddling both the real world of green technology and the more rarified world of economics and global climate finance.

The ongoing case of sexual harassment against RKP will carry on. Given the convoluted judicial process we follow, the “truth” will likely emerge only in the mists of time, long after the media has lost interest. But four home truths bear attention in the meantime.

Shoddy, knee-jerk laws

First, even our most recent laws lack a comprehensive world view. The 2013 amendments to the Indian Penal Code and the new act extending protection from sexual harassment in the workplace, only protect women. As a first step this is unremarkable in a world dominated by men in powerful executive positions.

But powerful men sexually harassing male subordinates is not breaking news. Why a similar avenue for redress in the workplace should not be available for harassed men is unclear. It shows a tendency for legislators to react to populist vigilantism and not from deep conviction that sexual harassment is an infringement of the workplace rights of any employee.

Bad laws result in perverse incentives

Second, draconian laws do not a more caring or equal society make. On the contrary, draconian laws to protect human rights coupled with a judicial process which lacks the advantage of speed and suffers from an excess of procedural compliance, is a sure recipe for gaming.

In such institutional environments- like the US- the advantage is invariably with the unscrupulous; the rich and the wily. The outcome is a high incidence of miscarriage of justice. This is also the argument against irreparable damage imposed by the State, as in the case of the death penalty. India would do well to abolish such arrogant assumptions of judicial infallibility.

That we need to do much more to protect basic human rights, including the specific case of women, goes without saying. But nuance, granularity, comprehensiveness and proportionate disincentives are the corner stones of good law.

Pious intentions but perverse outcomes

Third, bad laws lead to perverse outcomes. Take for instance the outcome of the 2013 laws. Male Chief Executives now implicitly discriminate against hiring women to work in their personal office to guard against inadvertent transgressions of the law. This discrimination can be neutralized if there was similar protection for male subordinates from a harassing boss. The gender preference for male executive assistants would narrow once the risk of inadvertent sexual illegality is equalized. But a narrow legislative view on the sexual harassment of only women, never created the space for such balancing mechanisms.

Advancing gender parity in the real world

Fourth, is it time that India prescribes quotas for women in power? Moving to a more gender equal world should be a priority.

(A) All government quotas for jobs, promotion or education should have a gender component. This will address the incentive for discriminatory resource allocation to males per the traditional gender roles within the family.

(B) Political parties should be legally bound to field an equal number of women candidates for elections as men.

(C) Government budgets should be gender responsive.

(D) All state owned enterprises and banks; Public Private Partnerships and companies in which the government is a significant (26%) shareholder should be required to publish a gender breakdown of employees by levels/grades with the intention of reaching gender parity, unless special circumstances apply.

(E) The July 6, 2015 judgement of Supreme Court Justices Vikramjit Sen and Abhay Mohan Sapre amends Christian personal law to allow an unwed mother to be the guardian of her child and thereby “legalize” the child’s parentage. The SC Justices based their decision on the generalized principle that in a secular country, religious practices can be divorced from law if they transgress human rights.

Similar progressive changes must be made in the personal law of communities to erode the legal dis-advantages women face in exercising their right to family property, inheritance and maintenance.

The legislative approach to gender parity is no more than a flag, signifying that India is responsive to international trends. We need to detox formal and informal Institutions which perpetuate gender discrimination. Death by a thousand cuts is the way to go.

924 words

Barefoot college

Photo: A skilling leader from Bunker Roy’s Barefoot College, Tilonia, Rajasthan- an international training center in solar engineering for the illiterate. Photo credit: The Guardian,

The appointment of the president of the Film and Television Institute of India (FTII), Pune, is taking on the epic dimensions of Satyajit Ray’s Ganashatru.

Gajendra Chauhan, the new president, is no enemy of the people. But the students seem to be right in resisting the government’s attempt to foist a minor film personality on them. Compared to past presidents, the present appointee is a wafer-weight.

India produces around 1,600 films annually, which gross $2 billion on 2.6 billion tickets sold. Other revenues are additional. The nexus between undeclared wealth, films, drugs and over-the-top living is tighter than a two-person lift crammed with six. Despite the sleaze, visual media and entertainment is where the world is headed. We should join the race to the top.

Instead we are stuck in Byzantine power struggles — between students and the government in the FTII; between management and the government in Nalanda University and recently in IIT-Delhi. Why these autonomous trusts and institutions are micro-managed by the government is a mystery — one of many in the inscrutable world of the Indian public sector.

The Nalanda University is an innovative public-private partnership. It created breaking news recently, not for its academic standards, but because the celebrated academic and Nobel Laureate Amartya Sen went public, that he was nudged to resign from the post of chancellor and chair of the governing council, thereby drawing attention to the pervasive power of the government to manage public institutions by proxy.

How should Chauhan and Dr Sen have behaved in the public interest?

Chauhan should have recused himself in the face of the student protests. If he feels the agitation lacks depth or is politically motivated, he could offer to conduct a referendum amongst the students, a la Alexis Tsipras in Greece, to prove his support.

Dr Sen’s public criticism, albeit carefully evidenced, of the “Gujarat model of development” — closely linked to Prime Minister Narendra Modi’s prowess — was sufficient to put the new governments back up. But he didn’t stop at data. He followed up with a weaker and more political attempt to tarnish the government’s credentials.

He publicly and pointedly rejected the parallel drawn by Narayana Murthy of Infosys between, the 1984 anti-Sikh riots and the 2002 “Godhra” anti-Muslim riots, as the consequence of misguided abdication of responsibility by political parties in power. By seeking to instead distinguish between the two horrors, Dr Sen wore his Congress affiliations on his sleeve.

In the event, the right thing for him would have been to resign from Nalanda on the grounds that it was against his conscience to work with a government he despises. By not doing so, he weakened his moral stand.

The last thing Mr Modi needs is disquiet in the higher echelons of the skilling establishments. The demand for skilling for employment is estimated at 425 million people over seven years till 2022. The available capacity is only seven million. India has a network of around 14,000 technical training institutes. What it does not have is a network of 100,000 leadership level professionals trained to manage this massive effort.

Existing initiatives in that direction seem disoriented. Why should one need a university for skilling — reported as one of the intermediate steps the government intends to take? Training trainers is the easy part. The really hard part is to link each training establishment to its natural market for skills with an eye on outcomes (employment) not outputs (the number trained).

The private sector can best fill the skilling gap. The information technology industry did this to grow and continues to do. Old economy companies in steel, cement, chemicals, engineering and construction are less willing to fund this public good. They complain that trained employees leave for better opportunities and skilling becomes a never-ending drain on company resources.

Old economy manufacturing is struggling under the twin challenges of squeezed margins due to domestic and imported competition and the large-scale migration of skilled workers overseas.

Mr Modi has astutely adopted this challenge as an opportunity. His proposal is for India to become the workforce supplier of the world. Presumably the idea is that the swelling inward remittances — $80 billion and counting — from overseas Indian workers is adequate compensation versus the cost of publicly funding the skilling effort.

Skilling is a public good but with strong private good characteristics. Displacement of worker skills from one company to another is not a net loss to the industry but an inter-company transfer. One company’s loss is another’s gain. Skilling costs should be borne by the respective industry associations — Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry and Associated Chambers of Commerce and Industry of India — from funds created for the purpose based on member subscriptions and donations.

But there is also a case for partial public funding. Worker skills transferred by migration to a foreign economy are a net loss for Indian industry but helps the country’s external finances via remittances.

This justifies some public funding also for skilling.

The elephant in the room is not the amount of money to be spent nor the number of skilling opportunities. These are manageable with good leadership. What is more difficult is getting the maximum bang for the buck. Spend on skilling should result in people getting employment.

The option to encourage workers to migrate flies against the wind. Borders are increasingly closing to migration as the world economy winds down. Labour shortage in the developed world can be envisaged in future. But for every job available there will be 10 applicants from developing countries in queue. Add to that the fact that workers from compatible cultures and those who speak the language fit better and Africa will have a head start on India.

No, the real elephant in the room is that there are not enough jobs available for skilled workers in India. The desire to become highly skilled wanes if one is to subsequently while-away the hours at nukkads (street corners) scanning the “wanted” advertisements.

Adapted from an article by the author in Asian Age July 20, 2015: http://www.asianage.com/columnists/skilling-gap-252

The writer is adviser, Observer Research Foundation

dionysus

For rational people, if this breed actually exists other than in the imagination of economists, the most logical way out of the Grexit logjam was for Greece to vote “yes, we can”. Just by agreeing to take the pain of austerity measures, they would have got the amount required for this year, estimated at around 80 billion euros.

Banks would have re-opened, ATMs would have started functioning and Greeks could have happily gone back to sipping their Ouzos in their favourite cafés. Meanwhile, negotiations could have carried on with Brussels and the International Monetary Fund on the minutiae of the minimum austerity measures required to access the 240 billion euros bailout package.

Negotiations and a hot head do not mix

If only the Syriza government had the foresight to seek technical assistance from the bureaucracy of any Latin American, African or Asian country on how to deal with agitated lenders, they would never have got into the mess they are in now. Developing countries, which went through the notorious IMF “structural adjustments” during the 1980s, have mastered the art of walking the thin line between throwing the bath water, but keeping the baby.

This is not an art the Greeks are skilled in. Greek theatre dating back to 500 BC has a tradition of keeping the two main genres — tragedy and comedy — strictly separate. Compare this with Indian theatre and Bollywood where the surefire mantra for success is to mix and match, masala. This is the underlying core of Indian flexibility and the omnipresent gene of jugaad.

But all is not lost. Greece and the rest of Europe are bonded by more than economics.

Greece is not alone

First, it’s not just Greece. Greece is beautiful, sunny and laid back. But it is not the only one. Italy, Portugal, Malta and even rainy Ireland, have all benefited from northern Europe’s largesse and subsidy. These partners in destitution are honour bound to press for softening the terms of the austerity measures. Whilst they don’t have much weight in decision-making, they can be the medium for an honourable back down, both for Greece and the lenders.

A group of southern Europeans (Spain, Italy, Portugal, Malta, Cyprus) pleading for mercy on behalf of Greece would allow Germany and the hard-working northern Europeans to back down without abandoning their harsh standards with respect to performance, keeping promises and fiscal discipline — the things prosperous countries care about.

Italy and Spain, the two big economies (together they account for 27 per cent of Eurozone GDP), are sunny, hot-blooded Mediterranean countries with an iffy record of fiscal rectitude. It would serve them well to make common cause with smaller economies in southern Europe just in case they need similar fiscal accommodations in future.

Sellers need buyers

Second, remember, the world faces a demand recession and growth is slowing. What could be better for Germany’s Northern Alliance than to show some noblesse oblige and allow Greece to continue to buy manufactured goods sourced from them, with borrowed money, in return for “progress on reforms” — making it easier to hire and fire workers and adjusting the liberal social security downwards?

After all, this dance of fiscal profligacy by borrowers and fiscal fundamentalism by lenders is not new. Developing countries have routinely needed and received such accommodation, paid for by taxpayers in the developed world. Generations of developing country citizens have suffered and endured precisely such privations brought about by the actions of their profligate, corrupt and inefficient governments. Why then should the developing country assistance code not apply to Greece?

Street fighters are rarely credible as administrators

Third, mind the credibility gap. History establishes that “Dutch courage” is difficult to sustain. The negotiating strategy of the Syriza government has been built around the assumption that Brussels would blink before they do.

This did not happen and Greece defaulted on its loan repayment to the IMF on June 30. Desperate to seek time, the Syriza government sought refuge in a referendum to support their hard talk. Many must have hoped that the people would betray them and vote “yes”, thereby enabling them to negotiate a surrender with the lenders, ostensibly out of deference to the will of the people.

They were thwarted in this plan by the campaigning of their charismatic, media-savvy finance minister, Yanis Varoufakis, who tapped into wounded Greek pride and induced the massive “no” vote. He subsequently resigned and left the people he incited to their own devices. This is a familiar ploy of street fighters who live on in public memory by seemingly heroic actions which burnish their esteem, never mind that people bear the consequences thereof.

But the civilizational glue still sticks

Fourth, the Syriza overestimated the value of the glue they provide to the Eurozone. Greece is less than two per cent of the Eurozone GDP. Turkey, now with an increasingly hard-line Islamic government, has been waiting to accede to the EU since 1987. Its GDP is double than that of Greece. But the problem is not economic; it is civilisational. An EU without Greece — the cradle of European civilisation — would be like Ramlila minus Ram or Bhairavi sung at midnight.

A new deal is needed to thwart the Russo-China combine

Whilst a departure by Greece does open a door for China or Russia to consolidate their influence in the Mediterranean, the burden of history is against this happening just yet. If the proud Greeks will not bend before the Germans, can one possibly imagine them in bondage to China?

Cosying up to Russia would be far more acceptable. But low oil prices constrain the oil-dependent Russian economy from becoming even more profligate than it already is in foreign adventures.

No room for those who don’t tie their own bootstraps

Truth be told, the Syriza’s strategy was audacious and imprudent. Here is why. The world no longer suffers those who do not help themselves. For the multilateral and bilateral lenders and banks to depart significantly, just for Greece, from the fiscal rectitude economic mantra they espouse worldwide, would mean different strokes for different folks. This would be unconscionable and overtly iniquitous in these politically correct times.
Adapted from an article by the author in Asian Age July 7, 2015 http://www.asianage.com/columnists/barbarians-temple-dionysus-026

saarah-ahmed-indian-pilot-8-march-15-513x239

Photo: Sarah Ahmed: Indian. Pilot.

July 4, 1995 — America’s Independence Day — Islamist militants take six tourists hostage in Kashmir. They decapitate a Norwegian and kill the rest, including two Americans. There has been no letup in the orgy of violence since. But now Islamists — Sunni and Shia militants — are eliminating each other in West Asia. Glee that the “enemy” is disintegrating is inevitable in both Christian and Hindu right-wing camps. But as Prime Minister Narendra Modi has repeatedly stated, albeit with scarce substantive effect, terror has no loyalties beyond the willingness to kill and maim.

The political economy of terror

Islamic terror, like terror anywhere, comes heavily loaded with political and economic objectives. The Taliban was created by the US to oust the Russians from Afghanistan in the 1980s. They and the Army are the only credible political actors in Pakistan today. Even China engages directly with them to protect its infrastructure investments and workers in Pakistan.

Saudi Arabia funds Sunni Iraqi militants to dominate the Shias of Southern Iraq and to undermine Syria’s Shia regime — all because Shias are perceived to be universally aligned with Saudi arch-rival Iran. Conversely, Russia and Iran support Shia militants in Iraq and the Shia regime in Syria. It is not inconceivable that in future Shia militants may be used to neutralise the Taliban in Afghanistan.

Ashraf Ghani — the technocratic President of Afghanistan — would probably welcome a dilution of Taliban power so that he can get on with implementing the development agenda.

Endemic warlordism and militant factionalism in North Africa and West Asia was constrained during the Cold War (1960-1990) by authoritarian regimes supported either by the US or the Soviets. Ironically both the democratic US and the Communist Soviet Union had no qualms about imposing authoritarian regimes as the norm in the region. It helped that till 1990, even the metric of development ignored politics as a factor and focused primarily on enhancing per capita income levels.

Democracy as a metric of development

The change came with the surprisingly sudden collapse of the seemingly well-off Soviet Union, a middle income country in 1990. Soviet unsustainability was ascribed to the absence of Western-style institutions — elective democracy, rule of law, small governments, markets, competition and choice.

Post 2001 (9/11), this development mantra acquired evangelical fervour, as an instrument to “civilise” the “arc of Islamic terror” stretching from Afghanistan in the east, through Egypt and Sudan to Mauritania in western Africa. The Arab Spring (2011) was hailed as the blossoming of democracy in time-warped North Africa. Once invincible, Hosni Mubarak in Egypt, Muammar Gaddafi in Libya and Zine El Abidine Ben Ali in Tunisia bit the dust and the people won. This was the expected upside.

The unintended consequences of Democracy: strengthening traditional fault lines

But two unanticipated downsides were less palatable. First, democracy became uncontainable — like a nuclear explosion. Democratic contagion travelled south and shook the gilded birdcage lives of the Sunni sheikhs of the Gulf states and deposed President Ali Abdullah Saleh of Yemen via tribal bloodletting which rode on the aftershocks of the Tunisian “Jasmine Revolution”.

Second, democracy in Egypt empowered the Muslim Brotherhood — a transnational Islamic party pushed underground by Mr Mubarak. For the G7, “Islamists” ruling Egypt was a horrific replay of the deposition of the “modernist” Shah of Iran in 1979 and the subsequent rise of a “renegade” nuclear, Islamic Iran. The Egyptian “Brothers” — beneficiaries of Islamic democracy — were presented as role models for disenfranchised commoners across the region. This questioning of the elite order was not what the sheikhs or the G7 had bargained for, or desired.

The G7 were comfortable with a “managed democracy” — the bare-bones institutions of a democracy, never mind if the

democratic spirit was non-existent. What they got was an unruly explosion of the democratic spirit — a magnified version of rumbustious, Indian style democracy, where rights trump responsibilities.

Libya disintegrated into armed militias and cost the US the life of its young, well-liked ambassador Chris Stevens. Yemen remains a cauldron of tribal militias. This democratic disorder is much like the persistent clan and tribe-based militancy in Manipur and Nagaland in India’s Northeast, funded by the drugs and arms trade with “wink-nod” support from China.

The recent bomb blast in Tunisia, which killed several British tourists, is similar in intent to the blasts in Mumbai in 1993 and the terror attacks in 2008. The former, managed by smuggler and mafia don Dawood Ibrahim, rode on the back of Muslim anguish at the unlawful destruction of the Babri Masjid by Hindu right-wing groups. The 2008 strike is credited to the Inter-Services Intelligence — Pakistan’s dirty-tricks entity. Both aimed at hitting where it hurts the most — the economy.

Tackle Islamic terror with targeted incentives for peace and development

Can we really expect Indian Muslims to remain unmoved by the global trends in Islamist terror? A few misguided young men have already joined Islamist groups in Iraq and paid the final price. But most Indian Muslims look inwards to a domestic solution to break out of the downward spiral that events drag them into. This is where government intervention can help.

First, reducing poverty helps all marginalized groups. There is a broad congruence between Muslims and poverty in India even today. Focusing on  poverty reduction more vigorously also reverses the marginalization of poor Muslims in Independent India.

Second, a more visible signal is also needed. Positive discrimination like reservations is unhealthy. It pits Muslims against the existing beneficiaries — dalits and backward castes by generating a scrabble for a fixed pie. Far better to instead to empower young Muslims to work productively in the modern economy. Modernizing the curricula of the madrasas is a long-term, sensitive but powerful option. Indian Muslims shine in private enterprises where success is meritocratic and not dependent on connections, networks or preferential access to education or progress at work. They are the core of Bollywood, handicrafts, the arts and our cricket team.  Ashwini Kumar’s Inshallah, Football is a touching film about how a dedicated Brazilian coach uses football leagues to meet the needs of aspirational youth in strife-torn Kashmir. They must be directly supported to do be better prepared for private enterprise which, is in any case, is the growing sector. Indian Muslims must also be assured that being part of the modern economy does not and should not, mean having to abandon traditional beliefs or culture. India is not France. We are a plural society.

Third, politics must lead by example.  Religion is deeply embedded in India. Politics must learn to live with religion as a political force rather than pretend to work within an a-religious framework. In this context, the new government in Jammu and Kashmir which federates the right-wing Bharatiya Janata Party of Jammu with the Kashmiri Muslim’s People’s Democratic Party in the governance of the state, is a progressive model which explicitly recognises that religion, like caste, is a legitimate basis for political action. True secularism is recognizing the right of citizens to organize themselves politically on any basis which provides a legitimate common cause.  Better to reflect traditional fault lines honestly rather than paper them over with the Band-Aid of pseudo-secular, socialist gibberish.

Fourth, women are the prime movers of social change, particularly in South Asia. Sheikh Hasina, Prime Minister of Bangladesh, Mayawati, the Dalit leader of Uttar Pradesh, and the young Pakistani Nobel Laureate Malala Yousafzai are examples. Leveraging potential Malalas in India via expanded and targeted education and health is what the government should be doing, if one-third of our population — Muslims and Dalits — are to make common cause with the rest of India.

Adapted from the authors column in Asian Age July 2, 2015 http://www.asianage.com/columnists/terror-s-echoes-home-748

Socializing the Dragon

dragon

(photo credit; http://www.mrwallpaper.com)

China has “bested” its way onto the big boys table through three critical initiatives which bore fruit since President Xi took over as China’s numero uno in 2013.

The first was the founding of the BRICS New Development Bank (NDB), headquartered at Shanghai. Symbols speak louder than words. The logo of the NDB is eerily reminiscent of Chinese communist logos of yester-years encased in two encircling stalks of wheat or maybe olive branches, as in the UN logo. At its center is a round blob with geometric shapes embedded- a suitably vague and nondescript statement of intent, possibly illustrating that the Bank can go any which way and has endless opportunities.

Whilst the first President of the Bank is an Indian corporate guru -K. V. Kamath, no one is under any doubt that it is China which will call the shots, exactly as the US does in the World Bank or Japan in the Asian Development Bank. This is fair since she who pays the bills gets to call the tune.

The second success was to get thirty eight regional and twenty non-regional countries, including members of the G8 except the US, Japan and Canada who kept away, to sign up as Prospective Founding Members of the Asian Infrastructure and Investment Bank which is to be based in Beijing. The candidature of North Korea and Taiwan was refused by China. The former because it is a renegade and the latter because China does not recognize Taiwan as a sovereign country.

The third success completes the trilogy of China’s financial hegemony. China has offered to fund the European Infrastructure Fund at a time when Europe’s powerhouse- Germany and the European Union are engrossed in managing the financial bog of a potential “Greek exit” from the Euro and the likely ensuing turmoil. Massive investments in infrastructure are viewed as one way to kick starting growth in Europe, which has lagged recovery post the 2008 crisis. With Europe agonizing over how much more pain it can take, China’s generous offer of financial support is well timed.

China gets it fiscal muscle from its foreign exchange reserves of over US$ 3.7 trillion. These are down from their peak last year of nearly US$4 billion but remain the largest reserve ever. The annual trade surplus is a healthy US$300 billion plus. Its budget deficit, albeit increasing is still low, though off-balance sheet borrowing by state owned enterprises and the iffy quality of bank assets could cloak an incipient problem.

Its diplomatic and economic muscle is evident from its success in cowing down the meek protests by the Philippines and Japan against its assertive claims over small islands in the South and East China Sea. Far-off South Africa, the continents most developed economy, has repeatedly refused to give a visa to the Dalai Lama since 2009, reportedly out of deference to Chinese sentiments. The Dalai Lama, who is resident in the gorgeous Indian mountain paradise of DharamshaIa, is not recognized by China as the titular head of the Tibetans. China promotes an alternative in the Panchen Lama who is resident in Tibet.

Only the feisty Mrs. Merkel, Chancellor of Germany has had the gumption to ignore China’s ire and met formally with the Dalai Lama. Now with China bailing out Germany-till now the primary “money bag” for the reconstruction of Europe – the jury is out whether Mrs. Merkel would be inclined to repeat this diplomatic equivalent of thumbing her nose at China.

There are two jewels China still seeks. First is to implement President Xi’s vision of reviving the ancient silk route from Western China to Europe. The second is to develop a maritime silk route in the Indo-Pacific region from Myanmar via Bangladesh to India and Sri Lanka. Possibilities exist of extending this further West to Pakistan (where China is already developing the Gwadar port) and Iran where India is tentatively engaged in a similar venture at Charbahar.

These Chinese financed beltways will straddle Asia physically. If China pulls it off they are sure benefit the economies of the continent by reducing transit cost and linking local markets better. But the key issue spoiling the party is sovereign doubts about China’s true intentions in proposing these extravagant infrastructure plans.

Action speaks louder than words. Chinese overseas investment, particularly in Africa, is perceived to be driven too narrowly by self-interest. Its muscular approach to safeguarding what it considers its justified claims in the South and East China Sea give rise to fears of territorial expansionism.  Despite the fact that the India-China border has been peaceful for the last forty years the fear of conflict is ever present.

China needs to demonstrate that it has crossed the hump of middle-income prickly aggression into the beneficent altruism of a self-confident, high income country. It needs to take on an international commitment which demonstrates its resolve to make the world a better place.

It has already taken the first step by voluntarily capping carbon emission by 2030 including by increasing the share of clean energy to 20%. The voluntarism is praise worthy. But a bird in hand is always more credible than two in the bush by 2030.

Stabilizing Afghanistan presents an existential challenge which China can use to establish its credentials as an international force of substance. This single initiative can start a virtuous cycle of development in the “roundabout of Asia”- as president Ghani of Afghanistan, terms his country- with spill over benefits across the region.

China is well placed to substitute the US in leading this effort. It has a close relationship with the Pakistani army and civil leadership which are crucial to contain the Taliban. It has the resources. The US is reported to have spent around US$ 800 billion in Afghanistan, over the thirteen year from 2001 to 2014. This is not a scary number for China, especially since there are spin off benefits- bringing to the international market the huge copper and iron ore deposits in Afghanistan; honing the experience for the Chinese army and equipment in the field and creating a stable buffer in Afghanistan which can sever the existing arc of terror and violence that extends today through Syria, Iraq, Iran, Afghanistan to Pakistan.

The real question is will President Xi bite this bait to flex muscle productively or shall transactional engagements remain the order of the day for China.

1061 words

Rijiju

(photo credit: northeastnews.in)

Bloodletting always makes good copy. No wonder then that the killing, by Naga rebels, of 18 unarmed Army jawans going on leave in Manipur on June 5 and the airborne counter-strike on June 9 by Indian troops on rebel camps in Myanmar, stirred public sentiment. The depth, the speed and the effectiveness of the Army response was breathtakingly efficient, and reflects the capabilities of our Army when it is effectively led.

But the “cheer-leader” type response of the young minister of state for information and broadcasting — Colonel Rajyavardhan Singh Rathore, himself an ex-Armyman, using Twitter handles to extend dire warnings that Indians will root out terrorists who attack India or Indians anywhere, was reminiscent of President George W. Bush’s forceful “Marlboro Man” resolve to “hunt down” the Al Qaeda perpetrators of 9/11.

Col. Rathore forgets that President Bush was targeting enemy aliens who had wreaked havoc on American soil. Naga rebels are as Indian as the minister — historically disgruntled though they may be. Surely the optics of managing our own rebels has to be different from the manner in which foreign enemies are dealt with.

Col. Rathore will rue his remarks should he, one day, become minister in-charge of the Northeast — as his more illustrious colleague Gen. V.K. Singh (retd) is today. Negotiating with “rebels” you wanted to once hunt down becomes unnecessarily more awkward and difficult.

Alternatively, Col. Rathore could, in future, become minister in the external affairs ministry where he will rue a hawkish image whilst dealing with our immediate neighbours. The friendly government of Myanmar ostensibly only came to know about India’s targeted penetration into their territory, after the airborne Indian Force had returned — a mirror image of the US strike to hunt down Osama bin Laden in Pakistan.

No government likes its sovereignty to be taken lightly, least of all our immediate neighbours in South Asia, who already bristle at our “big bully but empty pockets” image. China is also a big bully, but at least they shut the protesting mouth with cash.

The point Col. Rathore should consider is that he is not mandated to speak on matters outside his portfolio. He may have personal opinions. As an ex-Armyman it would be natural to glow with professional pride at the faultless manner in which the operation was executed.

But the code on tweeting personal opinions by ministers was established in 2009. Shashi Tharoor, a junior minister in the previous government, got a rap from his party for tweeting jocularly that he was willing to travel “cattle class” or economy on government work in solidarity with all our “Holy Cows” — a particularly evocative term for the “secular”, very politically correct optics code of the Congress.

India’s very professional armed forces, like all professional soldiers worldwide, are the first to acknowledge that violence, even when it is justified and used by the state legally, is at best a necessary evil to deal with those who do not respect the rules of law. The Army is a highly honed, surgical knife, effective only when used for the shortest period to maximum effect. Violating this key axiom for their deployment results in rapid degradation of their effectiveness. This is what happens when the Army is used for extended periods to ensure internal security as in Northeast.

India has made enormous strides on the diplomatic front by establishing a functional relationship with the government in Myanmar. No trivial task given the political contradictions within Myanmar. The nascent democratic architecture; our ambivalent competition with China — intent on using Myanmar as an overland route to the Indian Ocean area; India and Nobel Laureate Aung San Suu Kyi’s subdued take on the human rights of the marginalised Rohingya Muslim community — all add to the complexity of Indo-Myanmar relations.

But it is on the domestic front in Nagaland and Manipur that the deficiencies are more extreme. As in Kashmir and in the Maoist-affected eastern districts, the incentive for local citizens, including rebels to end the conflict is less than self-evident.

It does not help when local administrations are elitist, historically weak, inefficient and often corrupt as in Nagaland and Manipur.

The jury is out on whether democracy helps or hinders this process of stabilisation in conflict situations. It is entirely possible that a strong authoritarian government, with deep pockets can “crush” rebellion temporarily. This is the expectation in China. But it is yet to happen in Tibet or in Xinjiang.

Unless the root causes of marginalisation are addressed and the incentive to conform to the rule of law becomes greater than the incentive to rebel, sustained stabilisation is unlikely. In any case, India is committed to working within the democratic framework. Both Nagaland and Manipur have elected governments, as in Kashmir and they have to be supported to take control. Emerging from conflict into peace is a complex societal process.

The good news is ordinary people in war-torn areas are usually unequivocal about their desire for peace. Padma Rao Sundarji’s Sri Lanka: The New Country presents this alternative view that local Tamil Sri Lankans, in sharp contradiction to the jingoistic sentiments of overseas Tamils, are happy that the domestic war in Sri Lanka has ended. All “armies”, including ones own, are extractive in character and feed off the local population, which suffers the economic cost, the indignities and the atrocities of conflict.

Rebels living comfortably abroad sheltered and assisted by “friendly” foreign governments and their agents never truly represent the ordinary citizen in the conflict zone. The recent incidents in Manipur are surely not the last round in the battle of attrition, ongoing since 1952, between the Indian state and the Naga rebels.

The real question is whether we are doing enough to innovate a domestic political solution? Can Team Modi build the process of reconciliation on the aspirations of educated, young Nagas? Are there more Kiren Rijiju’s (junior minister for home who is from Arunachal Pradesh) out there?

Adapted from the Asian Age June 12, 2015: http://www.asianage.com/columnists/innovate-move-conflict-peace-902

BeltTight

(photo credit:www.webmd.com)

It’s final now. The run of good luck PM Modi enjoyed has tapered off.

The monsoon is likely to be deficient by 12%. This would be the second year in a row. True, agriculture only accounts for around 15% of the economy and didn’t grow much last year either. But when you target 7.8% growth every basis point, added or lost, counts.

Manufacturing and services growth is already slow. Companies are at best cautiously optimistic but the caution makes new investment sticky. The money and jobs spinning realty sector, driven earlier by negative interest rates, is in a slump.

To complete the “perfect storm” scenario there are two important state level elections around the corner-Bihar later this year and UP in 2017. Neither state has BJP governments currently, so doing well in these will inevitably be a metric of how strong the Modi magic remains.

The good news of course is that every threat is also an opportunity. This is PM Modi’s opportunity to show that he is the Lion we think him to be.

Fiscal stability disaster prone

First, more will need to be spent on drought relief; restructuring of bank loans for farmers and income support schemes for farm workers. Delhi, admittedly with a miniscule rural area, has already distributed Rs 50,000 per hectare as relief for the farmers hit by the April 2015 unseasonal rain. FM Jaitley is possibly right that the drought will be localized in North and Central India. But these regions account for around 45% of the farmers. Retaining the targeted revenue deficit at 2.8 % and public investment at 14% of the budget will consequently be tough.

Postponed subsidy reform

Second, it is unlikely that subsidy corrections will now be possible this fiscal. Cheap electricity, water and fertilizer are here to stay with a possible relaxation of the tight minimum support price policy of the last few years.

Higher wage cost

Third, a significant expansion in the wage bill looms. For the armed forces it is the One Rank One Pension promise of the PM.  For the Civil Service the recommendations of the 7th Pay Commission are to kick-in from 2016. Luckily the wage bill is low by international standards- 1.6% of GDP and 14% of the budget. But even small incremental increases, unless accompanied by efficiency enhancing restructuring, are not affordable this year.

This perfect storm of shocks cannot be wished away. Better to deal with it upfront. Here are five suggestions:

Winning the market perception battle

First, don’t be cowed down by stock market fluctuations or seek to pander to them. These are short term adjustments by speculators and not reflective of annual economic prospects. Consequently, rather than play down the “perfect storm” scenario it makes sense for the government to highlight the extreme shocks they are battling with to keep economic growth growing. Even in this David versus Goliath scenario, what is key is to share a plan of action on disaster management; income support; and realigning revenue expenditure to retain the revenue deficit and investment target.

Nothing much was heard about the recommendations of the Bimal Jalan, Expenditure Management Committee (August 2014). But it could provide some useful strategic, short term revenue expenditure rationalization measures.

Cut the Red Tape

Second, stressful times also create an environment conducive for administrative reform. PM Modi’s can quickly lick babudom into shape through positive strokes. He should consider setting up a lean but empowered “Decision Support Team” in his office, manned by ten senior Joint/Additional Secretary level officers selected for their expertise in key sectors; their ability to persuade and their flair for collaborative performance.

They would be mandated to speak for the PMO and be tasked to work with the key ministries and state governments to cut through red tape holding up investment decisions. Working against weekly targets with real time feedback to the PM, the mantra for this team should be “ANA- Achievement Not just Activity”.

Those taking up such high tension assignments should expect to be on the fast track to become Secretaries to the GOI.  The PM is known to be cagey about trusting officers beyond a tiny circle familiar to him. This is not surprising given that he has never worked closely with the babudom in Delhi. But he should experiment by subjecting a larger group to the “agnipariksha” of performance. He will not be disappointed with the results.

Forget the optics of who gets the credit

Third, the knotty problem, particularly in Bihar and Uttar Pradesh, is how to be proactive in the face of state governments, which have the incentive to rebuff such support as being politically motivated.

The farmer does not distinguish between the state and the Union government (Lokniti Survey 2013) – 58% held both the state and the Union government responsible for the sorry plight of agriculture. If farmers fall through the gaps of political finger pointing, they will punish both the BJP and the SP-in Uttar Pradesh and the JD (U)-in Bihar. The beneficiaries of apathy will be Bhenji (Mayawati- the BSP supremo) in UP and Lalu Yadav in Bihar. Doing little is not an option for the Union government despite some of the shine rubbing off on the SP and the JD (U).

Don’t rattle the private sector

Fourth, it would be a big mistake to take too seriously the campaign to paint the BJP as a consort of the corporate sector. When stern action is warranted, it must be taken transparently and without rancor or bluster. But a “Preet Bharara type” of regulatory action is not what we need. Jobs are what the average citizen wants, which only the private sector can generate them.

Strong arm regulatory actions against foreign investors are bad optics- both for investment and for citizen sentiment. If our regulatory agencies are seen to be handmaidens of the government, they lose credibility. But the government also loses by devaluing an efficient instrument for regulating the private sector in a hands-off, technical manner.

Sticky revenues

Fifth, boost revenue. The tax receipt scenario is grim. First, projections for the year were over optimistic at Rs 14.5 lakh crores (US$ 230 billion) around 16% higher than the previous year. Tax receipts are bound to slide with slow external and domestic demand and lower corporate profits, despite the 15% increase in the rate of service tax. A tax receipt equal to last year’s estimate of Rs 13.7 lakh crores (US$217 billion) or 9% more than the actuals of last year is the best we can hope for- 5% points due to inflation and 4% points due to growth of the taxable base.

Getting more tax payers into the net is a worthwhile but effort intensive option with limited upsides. In 2013-14 there were 47 million direct tax assesses. New assesses have varied between 1 to 3 million per year since 2011. Even doubling the number of new assesses helps only marginally in additional revenue.

Transferring the crown jewels to citizens

There is more upside in fast tracking disinvestment. Listed Public Sector Undertakings (PSU) account for 13% of the valuation of the Bombay Stock Exchange or around Rs 13.6 lakh crores (US$ 215 billion). Of this, some equity is already held privately by minority investors. But an additional 10% can be sold without diluting government’s majority control. The problem is that, in the past, Institutional Investors have been the primary takers for such shares. Retail investor appetite has been largely absent from the tumultuous stock market for some years now and market momentum has been primarily provided by Foreign Institutional Investors.

Selling PSU shares in large volumes, without transferring majority control to the private sector, dampens the market price. Even the private IPO market is slow. Government is wary of inviting the charge of crony capitalism by selling shares to large institutional investors at cheap rates.

On the other hand, selling directly to retail investors is more defensible even if the price is low. After all the “Crown Jewels” really belong to citizens. Dispersing the ownership of PSUs widely also meets multiple objectives. Why not borrow a leaf from Dhirubhai Ambani’s 1982 market making strategy and incentivize the retail investor back into the market?

Link disinvestment, as a sweetener, to the issue of government debt for retail investors only – special convertible bonds – with a fixed return for three years at the prevailing Government Bond rate. 50% of the face value could be optionally convertible on termination in 2018-19, into a balanced bouquet of public sector equity at a 15% discount to the then prevailing market price.

A sequenced, mega issue of Rs 1 lakh crores (US$ 16 billion) of an asset backed government security can reduce the short term risk profile of PSU equity investments and pull in finance from an alternative source.

Government must come out with an evidenced strategy to deal with the “perfect storm” India faces. Of course, the PM is a “lucky General”. The drought may not materialize; the world economy may sort itself out and the opposition in Bihar and UP may self-destruct. But waiting for this to happen may be pushing the Gods too far.

Lion

(photo credit: http://www.archives.financialexpress.com)

Prime Minister Narendra Modi’s adoption of the Asiatic Lion as the symbol of “Make in India” has triggered off a debate. The lion — Gujarat’s state animal till now — has become ubiquitous. The brilliant, public brand developer, Amitabh Kant has made the lion near synonymous with Incredible India, as Dalda once was for ghee (clarified fat).

The lion now appears in tri-colour ruffles; bedecked with flowers; impaled by pistons, wheels and gears; outlined in bright LED lights or most elegantly just in a steely grey profile. The message is clear — India is not a power you can mess with.

Of course, the truth about the lion — but not the lioness — is that it is the laziest big cat ever. It uses its overpowering muscle mass and speed to forage for food; overeats voraciously and then sleeps contentedly barely able to control its snoring. But just the sight of its mane; its magnificent rock cut nose and jawline; its arrogant gaze and its tawny coat can bring on the goosebumps, absorbing the viewer for hours on end. The lion is not king without a reason.

In comparison, the Bengal Tiger — India’s national animal — is a furtive large cat which slinks about in the dense undergrowth. Whilst magnificently graceful and elegantly clad in striking stripes, it relies on strategy and guile in making its kill. Lions are more transparent. They hunt in a pride and can even take down an elephant. The tiger is a solitary hunter and can even be done in by a pack of wild dogs.

Which of the two suits India’s image best? Today’s “muscular” India is closer to the lion than the tiger. For the longest time, through the 1970s, ’80s and till the 1997 financial crisis, East Asia was known for its fast growing “Tiger economies” — tightly managed, efficient, lithe and opportunistic.

India is far from that model. We are too big to emulate the East Asian steps or use the entry points available to them — FDI in electronics and automobiles from Japan and later China and external trade drive growth. We are too diverse to have a single model fit all requirements. The “Pride of Lions” model suits us best — group effort; selection of the fittest amongst the group to lead and a strategy which leverages our size and inherent strength rather than rely on our low levels of flexibility or the accompanying moderate speed.

Valmik Thapar — India’s best-known Tiger conservationist — suggests that adopting the elephant suits India best. In fact, the elephant is the state animal of three Indian states — Kerala, Karnataka and Jharkhand. But elephants can’t dance, jump or dunk. They do have prodigious memories and are very community minded. Elephants will mourn a dead member of the herd for considerable periods and are very human in their reactions to loss and their fondness for a drink when the Mahua fruit ripens.

But its ponderous pace reminds us of the bad old days of the Hindu rate of economic growth. Its high maintenance — a daily feed of 140 kg and water consumption of 120 litres is the kind of resource intensity we need to get away from.

Its proclivity for making false charges and trumpeting to scare off the enemy is too close to the regressive character of our political discourse today.

Its unfortunate tendency to defecate in large quantities at inconvenient locations is so similar to the India we are already used to, that it just cannot become a symbol of what we want to be. I suspect even Mr Thapar would agree.

In fact, most likely, his apparent willingness to forego the “national animal” status for the Tiger — his first love, in favour of the elephant, seems to be a red herring — a canny move to propose a substitute so impossible, that it can mire action in discussions for the next decade, thereby maintaining the status quo, which suits Mr Thapar best. This tactic is familiar to every well-trained bureaucrat and part of her arsenal of tactics for blocking change.

But move away from the tiger we must. Here are three key reasons for doing so. First, we would thereby enable its adoption by West Bengal, which currently has to make do with the unglamorous “fishing cat” as its state animal. This is unbecoming for a state where the mighty Sunderbans Tigers prowl. Also, Bengalis in India can never digest the fact that Bangladesh has unfairly appropriated the Royal Bengal Tiger as its national animal leaving them with just a cat. The recent Communist governments in West Bengal never bothered about this because for them all cats are the same. In any case, in the “man versus wildlife” debate, they are squarely on the side of man. Prior to them, the Congress government was a mere handmaiden of the Union government. Didi (chief minister, Mamata Banerjee) now needs to right this wrong.

Second, despite being the national animal and thereby enjoying the VVIP special security arrangements of Union government-funded tiger reserves, the tiger population in India has not stabilised. In contrast, Mr Thapar notes, the lion population in Gujarat has increased, thanks primarily to the proactive conservation efforts of the state government. The lesson is clear. If the tiger is to be saved, name it as the state animal of West Bengal, Uttar Pradesh, Madhya Pradesh and Rajasthan so that state governments develop a direct stake in its conservation.

Third, the question of naming the Indian elephant as our national animal does not arise. It is a beautiful animal and we don’t want to lose it by elevating it to this status.

But if the “national tag” is the kiss of death, what hope is there for the Asiatic Lion to survive its de facto national status? Here we have to pray that the “Lion” that we have as the Prime Minister, currently, will look after his own, just as he did in Gujarat.

In case Mr Modi does not deliver, we could always switch to naming rodents as our national animal and at least be done with them forever.

Reposted from the Asian Age June 6, 2015 http://wwv.asianage.com/columnists/king-industrial-jungle-282

Leyen

(photo credit:www.junglekey.fr)

Ursula Von Der Leyen, the scarily efficient and glamorous German Defence Minister, who is also incredibly mother to seven children, ticked all the required boxes for soaring rhetoric on a bilateral strategic partnership with India. Democracy, freedom, an open society, diversity and religious plurality being the ground for shared values.

Of course, she was careful to not mention the closest strategic arrangement yet between India and Germany, forged by Netaji Subhash Chandra Bose whose “Indian National Army” joined the “Axis” forces in World War II.  This fact is inconvenient on two counts.

First, Germany is still defensive about its authoritarian past under Hitler. Second, Netaji, whilst acceptable to the current BJP government, remains a big no- no to the Congress. He was Pandit Nehru’s rival within the Congress and had to quit. Displaying characteristic German caution, Ms. Leyen preferred to give the past a brush-over and concentrated on the future.

Today, the most visible link is the fascination of the Indian nouveau riche for high-end German cars- the Audi and its cheaper cousin the Volkswagen and the BMW stable- thereby uncharacteristically forsaking the “value for money” Japanese options.  The second common link is a taste for beer though German brands remain unrepresented in the Indian beer sweep stakes which is dominated by Dutch, American, UK, Australian and home grown Indian brands.

Human Rights and Democracy go together

To a direct question from a media representative whether a dodgy human rights record for India could sour any proposed strategic partnership with Germany, Ms. Leyen was quick to brightly aver that since the two countries were democracies,  safeguarding human rights was, by definition, of equal value for both. She could not have done better.

The response was in sharp contrast to the US Ambassador’s apprehension, recently voiced publicly, that freezing the activities of Ford Foundation and Greenpeace in India could chill Indo-American relations. But Ms. Leyen’s response also came as recognition of India’s long standing support for the rights of the exiled Tibetan community, resident in India. Chancellor Merkel has been an international exception in publicly snubbing China by maintaining warm relations with the Dalai Lama. PM Modi in turn has been quick to project the Indian origins of Buddhism.

Can Germany subvert NATO discipline?

For all the talk about a strategic partnership, it was not clear what the substance of this partnership could be. Germany and Japan (the defeated Axis powers of WW II) have both reaped the economic advantages of aligning with the victors and outsourcing their external protection to the US Nuclear umbrella for the last seven decades. Japan and Germany are the third and fourth largest economies, respectively, but on defense spend they rank a lowly eighth and ninth, behind the UK, France and even India (SIPRI 2015).

Is Germany seriously considering abandoning the US crutch and shouldering more of the defense burden versus Russia’s currently expansive ambitions in Europe? Would the additional fiscal burden be feasible given that the dodgy economies of Southern Europe are fast becoming Ms. Merkel’s subsidy problem?

This would be uncharacteristic for the cautious and pragmatic Ms. Merkel. Germany is increasingly dependent on natural gas imports, subsequent to it closing the nuclear power option. Russia is right next door with the largest reserves of gas and the pipeline infrastructure to supply it. It makes perfect sense for Ms. Merkel to continue to depend on the US for “protecting” Europe and avoid a direct face-off with Russia.

One lesson to learn from Germany is how aligning with a stronger partner for strategic purposes can free up public resources for development and growth. But it is unlikely that the context will ever fit the tough neighbourhood India is situated in and the compulsion of living with a “muscular” China.

Indo-German strategic partnership?

Indeed the question uppermost in Ms. Leyen’s mind was whether there was any future for an “alliance” with India, given our long standing adherence to the doctrine of non-alignment. It is unlikely that she will get a straight answer.

First, strictly defined “for-ever” alliances are now old hat. Germany, together with the UK, Netherlands, Denmark, the Nordics, Australia and New Zealand have ignored US chagrin at their participation in establishing the Asian Infrastructure Investment Bank- China’s counter to the Japan dominated Asian Development Bank.

Second, the past shows that alliances do not suit India. We are too large and too poor, to hang our hat exclusively on any one peg though it is not for want of trying. India has all the characteristics to be a natural ally for the rich, democratic world.  But the accident of history, or the perversity of diplomacy, has been that none of the rich, democratic countries (US, UK, EU) actually showed much interest in having an alliance with democratic India and its messy politics.

The rich, democratic world (G8) found it more convenient, during the extended “cold war years”, to team up with developing country dictators in Asia, Africa and South America in a global pact against Communism. Unfortunately, this also meant teaming up with elites and against the poor citizens of their allies in the developing world. This is what drove India into a strategic alliance with Russia in 1971 which has since lost its salience.

Make for India

Germany is today Europe’s powerhouse. India has shrugged off its mantle of lethargy. Demography is waiting to be exploited in India whilst ageing Germany needs skilled, temporary immigrants to drive their economy. This presents a huge opportunity for India’s unemployed but tech savvy youth.

Language will be a problem for Indian immigrants and this is one good reason why India should free up the language curriculum in schools and make it market oriented. Ms. Leyen is multi-lingual as must Indian kids become.

Around 12% of the German population has roots outside Germany but mostly in other European countries and Turkey. Ms. Leyen’s proposal for temporary migration, at scale, from India must be pursued.

A partnership with Germany will likely cater more to optics than substance. But the proposal to integrate the technical workforce in the two countries is a substantive addition via Indians making, for India and the world, in Germany.

A packed house turned out in the burning, mid-day heat of New Delhi to listen to Ms. Leyen and to get a glimpse of the endearing German ambassador and India buff- Michael Steiner.

Part of the curiosity was to see what the Germans had to offer in this new area of defense international co-operation. What was on offer publicly was underwhelming. Seeing and hearing the first woman Defence Minister of Germany was itself a novelty. But mostly, it was an opportunity to be with a possible future successor to Ms. Merkel once she decides Germany no longer needs her.

If this happens in 2017, PM Modi may be dealing with a powerful transatlantic woman-power tie up: Hilary Clinton in the US and Ms. Leyen in Germany – both of whom are likely to provide him stiff sartorial competition.

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