governance, political economy, institutional development and economic regulation

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/

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#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

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Slash petroleum consumption

September 5, 2018

free

Retail prices of diesel and petrol are the lowest in Delhi, among India’s key metropolitan cities. It isn’t cheaper to supply them to the national capital than in Chennai, Mumbai or Kolkata. The difference is that Delhi and Goa levy lower value-added-tax on petroleum products (PP) than poorer jurisdictions, even though they are havens for high-income residents. But charity, they say, begins at home. And Delhi – the home of two governments and five municipalities – is the biggest beneficiary of a twisted application of this principle.

Bring petro-products under GST for pan-India consumer equity

State-level autonomy should be, but not to subsidise the better-off. Goa has the highest per capita gross state domestic product, followed by Delhi. Bringing petro products (PP) under a uniform Goods and Services Tax could ensure equity for consumers across state borders. Punitive tax rates on PP are desirable to slash consumption.

Petro Products import destabilise our external balance

We import 80 per cent of our PP requirement. The net import of crude oil and PP (after subtracting earnings from export) accounts for 50 per cent of our merchandise trade deficit. This is an unsustainable draft on foreign exchange resources. Oil price fluctuations are a of considerable volatility in the exchange rate of the rupee. This has knock-on negative effects on cross-border capital flows and the servicing of our external debt.

Petroleum prices instantly transmit shocks from war & politics internationally

In March 2018 the International Energy Agency said that “oil production growth from the United States, Brazil, Canada and Norway could keep the world well supplied, more than meeting global oil demand growth through 2020”. We expected lower oil prices. But in May, US President Donald Trump decided that Iran — a major oil exporter — should be threatened with sanctions for alleged deviations from oversight constraints on its nuclear enrichment programme, agreed with the United States under former President Barack Obama.

India is particularly vulnerable to collateral damage on its energy security. This alone is sufficient to push us to use PP mainly for road freight. In addition, there is the global need to curb carbon emissions and the domestic imperative to reduce air pollution and road congestion in cities.

High taxes and retail prices on petro-products & associated private motor vehicles can finance adaptation and mitigate the negative externalities.

Discriminatory taxes on the purchase of vehicles, graded by their carbon intensity and on fossil fuels – other than cooking gas and natural gas for meeting peak electricity demand – are socially desirable. Pricing diesel – an efficient but polluting fuel – the same as petrol can discourage its use for light passenger vehicles. The use of cooking gas rather than wood, coal or kerosene, has significant health benefits, particularly for women. It is a merit good. Using Rs 300 billion, or 10 per cent of the Union government’s Rs 2.8 trillion revenue from indirect taxes and royalty on the petroleum sector, as subsidy to promote cooking gas, is justifiable.

Consumers of petrol and diesel feel short changed since they never benefited from the decline of international crude oil prices. During the past four years (FY 2015 to FY 2018), the average cost of the Indian basket of crude was 43 per cent lower at $58.6 per barrel, than during the previous four fiscal years at $102.6 per barrel. Part of the reduction in oil prices was negated by depreciation of the Indian rupee. The average exchange value of the rupee against the US dollar was 24 per cent lower at Rs 64.50 during fiscal 2015 to 2018 versus Rs 52.10 in the earlier period FY 2011 to 2014.There was an insignificant change in the average retail price for petrol in Delhi between these two periods. It hovered on an average between Rs 64 to Rs 65 per litre. The Union government used the windfall benefits from cheaper oil to reduce the fiscal deficit by one per cent of GDP over the last four years. This was sensible. But more sustainable options are needed to remain within the fiscal deficit target of three per cent of GDP.

Oil price to remain high but stable this year: 

Significant changes in the oil price ($82.73 per barrel currently for the India basket) are unlikely this year. China will defeat the purpose of US sanctions on Iran. The rupee will also likely remain around Rs 72 to Rs 74 to the US dollar. The retail price for petrol in Delhi of Rs 80-plus per litre could be here to stay. Is this a killer for the average consumer? Not really.

Fuel cost is not the major cost in private transport

Consider that even at Rs 85 per litre, the petrol cost is just one-third of the total cost of using a low-end, high fuel-efficiency car over a life cycle of 100,000 km. For high end cars the fuel cost is even lower between 20 to 25 per cent of life cycle cost. Two-thirds to four fifths of the cost comes from the purchase price of the car and its maintenance.

Delhi is congested with private motor vehicles because fuel is cheap

Delhi accommodates just 1.5 per cent of India’s population. But it has 10 per cent of two-wheelers; 23 per cent of cars and 10 per cent of jeeps in the country. Low retail prices for petro-fuel incentivise Delhiwallahs to shun public transport; car pooling; the use of bicycles or merely walking to their destinations.

Cheap fuel makes public passenger transport unattractive 

bus service

Consider also the ensuing disincentive for a commercially viable, well-staffed, secure and reliable public bus or metro service because the alternative of personal transport is much more attractive. Admittedly, Delhi has severe security issues – particularly for women. But higher VAT on fuel can fund a bigger fleet of buses; finance a PPP with Uber, Ola for a 24×7 high-end bus service with digital security features; bridge the price gap with electric cars or fund secure bicycle and pedestrian tracks and overbridges. Levying user charges for overnight parking can reduce encroachment on colony roads in residential areas.

A mix of incentives and disincentives can wean people off their yen for motorcycles and cars. Massive, mobile chunks of highly-polished metal do not define the value of a human.

Highly polished, mobile, metal spewing toxic waste and hogging road space is a perverted status symbol

cars

These are hollow status symbols and a toxic wall between the haves and the have-nots.Our metros, like the National Capital Region, are well and truly mollycoddled. These magnets of opportunity attract migrants well beyond sustainable levels, who feed their sprawl. All those who choose to live here must learn to pay for the social and environmental cost they impose on the rest of India via their higher consumption standards. Equity should start at home.

Adapted from the authors opinion piece in The Asian Age, September 5, 2018 http://www.asianage.com/opinion/columnists/050918/pampered-metros-need-a-reality-check-on-fuel.html

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Jaitley returns as FM

August 31, 2018

Jaitley returns

Arun Jaitley has returned to take charge as finance minister well before those who care for him would have advised. So what was the haste all about?

The uncharitable view would be that power abhors a vacuum. Politicians and film stars — no wonder the two often overlap — are most vulnerable to the prolonged loss of public face-time. What is most likely, though, is that he returned to his North Block corner office in order to cement his legacy as finance minister through the last and interim budget for 2019-20 of this government.

Chidambaram’s challenge to Jaitley

Chidambram 20142015 interim budget

This is a courageous move, very similar to his taking up Palaniappan Chidambaram’s implicit challenge in his interim and last budget in 2014-15 — a fiscal deficit target of 4.1 per cent of GDP — steeply reduced from 4.6 per cent in the previous year.

Mr Jaitley manfully accepted this unreal target and achieved it, noting in his budget speech: “One fails only when one stops trying”.

Fiscal stability has improved over Mr Jaitley’s tenure. The ambitious target for the current year is 3.3 per cent of GDP. Achieving this is crucially dependent on reduction in subsidies from two per cent of GDP in 2014-15 to 1.4 per cent this year, and a 0.6 per cent of GDP increase in tax collection (7.3 per cent in 2014-15 to 7.9 per cent in 2018-19).

The pressures for fiscal expansion come from the urgency to recapitalise publicly-owned banks; financing infrastructure via public funds in the absence of any appetite for India risk among foreign developers; the narrow base of unimpaired domestic infra developers and finally the compulsions of electoral politics.

Will Jaitley go for an endgame of Fiscal Deficit at 3 % of GDP

Other than achieving this year’s stretch fiscal deficit target, the finance minister needs to ponder on the target for 2018-19. Will he play the “Chidambaram card” and fix it at 3 per cent of GDP? Mr Chidambaram was pretty sure that he would not have to live within his interim budget. The jury is out on whether Mr Jaitley could reasonably assume a similar privilege. But reducing the fiscal deficit by a full percentage point of GDP below what he inherited would be in line with Mr Jaitley’s flair for challenges.

Chasing the UPA I go-go years of high growth

On growth — a sensitive issue for the BJP — Mr Jaitley has thrown a googly. He claimed recently that in trying to copy UPA-1 and chase high growth, both the banks and industry were destabilised through reckless lending and investment. This is a wise move.

It is unlikely that the growth record of UPA-1 (FY 2004-09) at an annual average of eight per cent plus would be achievable till after 2022. The IMF (August 2018 report) expects GDP growth to pick up over the next two years to 7.7 per cent. The “twin balance sheet problem” is likely to take three to five years to resolve, considering that “legal blustering” is a time-honoured mechanism for delaying a decision.

Public Sector Bank accountability and governance reform is key 

The Reserve Bank of India’s Financial Stability Report of June 2018 estimates that Gross Non-Performing Assets will worsen from 11.6 per cent in March 2018 to 12.2 per cent by March 2019. For the 11 worst-performing publicly-owned banks, the GNPAs will worsen from 21 per cent in March 2018 to 22.3 per cent by March 2019. For the six publicly-owned banks which the RBI has barred from fresh lending, the weighted average capital adequacy ratio will fall below the minimum required of nine per cent of loans.

The government has allocated Rs 2.1 trillion for bank recapitalisation, partly by increasing its own borrowings by 0.8 per cent of GDP. Additional borrowing of 0.5 per cent of GDP will be needed in the next fiscal year. Alternative schemes are being implemented like LIC, a publicly-owned insurance company, buying up the bankrupt IDBI Bank and infusing an additional Rs. 90 billion into it. This is mere fire-fighting. Unless bank lending and corporate governance become more market-friendly and transparent, investment levels will hover around the 30 per cent of GDP level — not enough for eight-plus per cent growth.

8 percent plus plus growth needs massive restructuring

Mr Jaitley’s is a nuanced claim. It implies that the growth during UPA-1 was not sustainable. The associated structural reforms to make the banks autonomous of government control; effective oversight of bank lending by the RBI and seeding economic liberalisation into field-level government regulations — labour laws, freedom from “inspector raj”, land regulation and transparent natural resources allocation, were all kicked down the road for successive governments — including the BJP, to manage.

Self goals are expensive

It is good optics to claim the present is hamstrung by the past misdeeds of others. But the BJP also scored some self-goals, most specifically demonetisation and the less than meticulously-planned implementation of Goods and Services Tax (GST)

Demonetisation was effective but cynical politics, which did not pass the “raj dharma” smell test. The GST snafu can be ascribed to the lack of expert skills or a tactical decision to trade off technical rigour against speed of implementation — a perfectly sensible trade-off in India’s fractious democracy.

India’s achilles heel- Twin deficit

India has a long history of carrying a twin deficit. The Fiscal Deficit, because government spends more than it earns annually and borrows, like the rest of us, who borrow to invest. But unlike most of us, it also borrows to fund consumption because we also run a Revenue Deficit. It is “effectively” small  at 0.7 per cent of GDP but typically we should run a revenue surplus to finance at least 20 per cent of our investment.

Our external account (net inflow and outflow of foreign exchange) is in a deficit. We have a Trade Deficit – imports exceed the export of goods and services.  60 per cent of the Trade Deficit is met from the surplus – ie. net inflow of expatriate remittances and foreign income versus outflow of interest on external debt.

What remains uncovered is the Current Account Deficit (CAD). This is met by net inflows of capital – FDI, portfolio investment and loans. The CAD is expected to increase from 1.9 per cent of GDP last year to 2.6 per cent of GDP this year, primarily because of the higher cost of oil imports. But India’s external debt is a moderate 20 per cent of GDP – of this short term external debt is just 9 per  cent, so both refinancing and debt servicing risks are manageable. And the fears of attracting American sanctions by buying oil from Iran have also receded.

The Indian Rupee is freed from its misplaced burden of being an icon of “National Strength”

A gradual rationalisation of the rupee exchange rate since January 2018 have made exports competitive and provide the required protection for domestic production from predatory imports feeding on an overvalued Rupee. The Reserve Bank of India, with its mandate for managing inflation, has kept domestic base interest rates competitive in tandem with trends in “safe havens” to manage the flight of foreign capital. The IMF estimates that the net inflows of foreign investment and portfolio capital increased from $28 billion in 2014-15 to $48 billion last year and anticipate $70 billion this year.

 

Burning his fingers once, while explicitly chasing growth, should not convert the finance minister into a growth wallflower. Rapid economic growth remains fundamental for equity. The trick is to use the lens of sustainable equity while laying our economic foundations. Growth will follow.

Adapted from the authors Opinion Piece in The Asian Age, August 30, 2018 http://www.asianage.com/opinion/columnists/300818/jaitley-returns-as-fm-to-cement-his-legacy.html

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The Saffron brotherhood in 2024

August 24, 2018

Vajpayee funeral

No one knows why Prime Minister Modi chose to walk behind Atal Bihari Vajpayee ji’s funeral cortege till “Smriti Sthal” (the place of remembrances), where India’s top politicians – are usually cremated. Was it to bridge the gap between his actions and the principle of Raj Dharma (ethical rule) enunciated by Atalji in 2002? Was he pre-empting possible attempts by the Congress or the Janata Dal, to appropriate for themselves, the legislative and executive legacy of Atalji – the gentle giant? Or was it merely to hog free public facetime on national TV?

Mind over matter

RSS 2

Truth be told, it matters little. What does matter is the impact the extended visual had, of senior BJP leaders trudging on doggedly, through the muggy heat, for 5 long kilometres and seeming none the worse at the end – including the mildly podgy BJP President, Amit Shah. There could be no better illustration of the core RSS ideology of “character building” – training the body through renunciation to execute plans thought up by a selfless mind.

Walter Anderson & Shridhar Damle, the authors of “The Brotherhood in Saffron: The Rashtriya Swayamsevak Sangh and Hindu Revivalism”, 1987 did a comprehensive review and ideology of the RSS at a time when the Sangh dominated the BJP.

The BJP demerged from the Janata Party in 1980. It won its first state level general election with a clear majority, only a decade later, in 1990 in Himachal Pradesh and Madhya Pradesh, quickly followed by Uttar Pradesh in 1991 and Rajasthan in 1993. At the national level its seats in the Lok Sabha increased from just 2 in 1987 to 120 in 1991 – far from a majority but it was the second largest party behind the Congress.

RSS/BJP rapid growth and Muslim appeasement

Its spectacular success was partly sparked by a tactical error by Rajiv Gandhi, as Prime Minister, in stoking a Hindu backlash by intervening legislatively in 1986, to reverse the progressive judgement of the Supreme Court in 1985 under Justice Y.V. Chandrachud, which had upheld the High Court ruling, allowing maintenance to Shahbano – a divorced, Muslim woman, under the provisions of the Criminal Procedure Code, 1973, even though her suit was not maintainable under Muslim Personal Law.

To assuage the consequential Hindu backlash against, what was perceived as “appeasement” of Muslim sentiment, the Rajiv Gandhi government opened the locks of the Babri Masjid in Ayodhya to allow access to the Hindu idols inside.   L.K. Advani launched his Rath Yatra for completing what Rajiv Gandhi had begun – building a Ram Temple, which led to the 1992 illegal demolition of the Babri Masjid by Hindu fundamentalists, even as the Government of Uttar Pradesh – then under the BJP and the Union government, under Prime Minister P. V. Narasimha Rao, turned a Nelsons eye to the proceedings.

Babri

More importantly it legitimated, in Hindu minds, the fundamental RSS opinion that unless Hindus presented a united front, democratic processes would result in a dilution of the Hindu voice in governance of the nation.

Anderson and Damle have now updated their 1987 work and covered the developments within the RSS and its affiliates in a new book –“RSS- A View to the Inside”. It is a great place to start understanding the relationship between the RSS and the BJP.

 Post 2012 shift in power balance from RSS to the BJP

The balance of power between the BJP and the RSS has turned since 1987. Of the over 100 affiliates (36 are listed in the book), BJP is the most significant. With a majority in the Lok Sabha and in state governments covering two thirds of India’s population, the BJP is a dominant national player and a significant voice within the Parivar (family) presided over by the RSS.

The RSS has also grown, particularly post 1990.  Nearly 2 million people are said to participate in more than 60,000 Shakhas (primary groups) which meet daily, weekly or monthly. The elite cadre of the RSS consists of 6000 Pracharaks (communicators). These can be functionally likened to the Weberian “steel frame” of the Union government. Unlike them, Pracharaks are unpaid full-time workers, whose meagre, monkish, needs are reimbursed. One half of them are on deputation to affiliates including the BJP – many of whose top leaders (like L.K. Advani and Narendra Modi) were Pracharaks. Significantly, Shah is not one of them, though he is a dedicated swayamsevak (selfless-worker).

Can the RSS be insulated from the compulsions of democratic success

If the BJP is re-elected to power in 2019 for the first time there would have been a decade of BJP political rule. Will this create tensions within the RSS, which remains resolute to its core ideology of nationalism, “character building”, evangelical (as in non-threatening) Hindutva and a belief in its higher moral purpose above mere politics? But this is not a red line. Its cadres actively pushed the BJP to power in the 2014 general elections. A similar strategy seems likely in 2019.

A clash of titans by 2024?

Titans

The more the RSS grapples directly with the politics of evangelical Hindutva the less would be its traction with its affiliates, like the Hindu Vishwa Parishad, which practise a fundamentalist form of Hindutva. The enormous addition in the resources available, which comes with political power in India, will enable the BJP to exercise overwhelming financial dominance over the other affiliates. Would the RSS, till now an umbrella organisation, the centrepiece of the “Parivar” retain its pre-eminence? Could it assimilate a “rainbow” of castes, regions and cultures – all of them products of modern India – into its spiritual view of Hindu culture?

Is there a possibility that a decade of BJP rule till 2024 could refocus the polarity around the BJP rather than the RSS, with the umbrella organisation become the cultural affiliate of the BJP?

This is undoubtedly an extreme scenario. First, the RSS is slow to change and prefers wide consensus to top-down decision making. The BJP under Narendra Modi and Amit Shah is the opposite. It moves rapidly and is completely centralised in its decision making. A war of attrition would probably favour the BJP.

Narendra Modi as Sarsangchalak in 2024

Modi RSS

This writer asked Walter Anderson, at his book discussion in the Observer Research Foundation, New Delhi yesterday, if he thought that by 2024 Narendra Modi, would recuse himself from active politics and become the Sarsangchalak – the supreme guide and advisor of the RSS – the position held, since 2009, by Mr Mohan Bhagwat and in doing so, merge the two organisations.

Mr. Anderson’s firm response was “No, a Sarsangchalak is always promoted from within the RSS and they despise politics. Mr. Modi would not want it any other way.” So, there you have it from the expert. Best to take his word for it.

Also available at TOI Blogs August 24, 2018 https://blogs.timesofindia.indiatimes.com/opinion-india/the-saffron-brotherhood-by-2024/ 

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Grow up well India

August 21, 2018

statistic_id254469_median-age-of-the-population-in-india-2015

So, what are we trying to say when we repeatedly stress that 65 per cent of our population is below 35 years of age? It is not as if we are growing any younger. In fact we are ageing. And that is a good thing because it is an outcome of development. India became younger between 1951 and 1970 when the median age (the point at which one half of the population fall below and above) decreased from 21.3 to 19.4 years due to improved healthcare and rising incomes.

Demographic googlies

Since 1970, the median age has increased steadily as people live longer, fewer babies die and fewer babies are born. By 2040, the proportion of the population below 34.5 years will fall to 50 per cent from 65 per cent today. Will that be terrible? Consider that by 2040 we will be in the same demographic boat that Singapore is in today. Age merely indicates we can become like Singapore in two decades if we do the right things.

The point here is that the advantages of a youthful population are exaggerated. There are 84 countries with a more youthful population than us today. None of them is competitive with India. The virtues of youth are likely to fade over time. Advances in artificial intelligence and healthcare will reduce the demand for manual work — which is best done by the young — whilst also prolonging productive life. This means that the definition of the workforce will change to include older folk — possibly up to 75 years — who will continue to earn, pay tax and pay-in rather than draw out from health insurance. Tata Sons and the BJP have already used the magic number of 75 years as a marker for obsolescence.

We are working towards an ageless society. The Pradhan Mantri Jan Arogya Abhiyan being launched on September 25 will provide in-hospital medical insurance to 107 million families (45 per cent of the total number of families) at the bottom of the income and caste pyramid. Public health centres in 150,000 locations are to be upgraded to provide pre-hospitalisation diagnostics and preventive care. State governments have also taken the lead in launching similar schemes for health security. Robotisation is widespread already in our automobile sector. Machines will progressively replace workers in construction, agriculture and sanitation.

Wear those wrinkles with pride – they signal the long road we have travelled

wrinkles

The bottomline is that we should not emulate the paranoia of filmstars about ageing. Our collective shelf life is far longer than the first flush of youth or middle age. We should also not be nudged into having more babies to keep the median age low. China, with a median age of 37.4 years, is reversing its family size restrictions and doing just that. But their demographic transition, like their economic transformation, has been jagged and artificially staged via the heavy hand of State control. Ours has been a natural demographic transition driven by personal choice, higher incomes and better old age and health insurance.

Hone kids to be productive future citizens

What we do need to fear is that we may continue our business-as-usual approach which prioritises near term results over sustainable growth. If India is to grow up with dignity we need to transform our educational system to produce multilingual, multi-skilled and multicultural professionals, as capable of cooking up a meal, singing a song or cleaning their toilets as of designing a complex space mission.

Hai! the plunging Rupee

There is another number which is being bandied about with alarm — the exchange rate of the Indian rupee versus the American dollar breached the 70-rupee mark last week. Our currency has been overvalued since 2013 because of a complex belief in a “strong” currency being a proxy for a “strong” nation.

False pride

strength

This belief is wrong on two counts. First, if our exports are not competitive because our currency is overvalued, relative to our peer exporters, then a strong rupee is merely false pride, not strength. Second, if strength is gauged from the ability of domestic producers to beat back the competition from imports and retain domestic market share, then a strong rupee works at cross purposes to this objective. It subsidises imports at the expense of domestic production. It taxes our exports and benefits our competitors like China.

The only thing a strong (overvalued) rupee achieves is to artificially reduce the landed cost of imported coal, petroleum products and military hardware. It also signals to foreign investors that exchange rate depreciation risks are minimal, thereby reducing the risk premiums they add to the hurdle rate of expected return from their investments. To this extent it reduces the stress on our fiscal position, improves the external balance and also impedes inflation.

However, these advantages of a strong rupee must be evaluated against the numerous downsides. Reduced employment and the loss of revenue from GST for those state governments, where producers have shut shop because of cheap imports. Consider also that a strong rupee actually encourages Indians to go on holidays and shop abroad rather than at home. This impacts retail trade directly. It simultaneously makes India an expensive tourism destination, versus options in East Asia.

Look to the RBI to set a predictable “real” exchange rate for the Rupee

A belief in a “strong” INR is as shallow as male machismo. Neither is a “weak” Rupee the answer. Setting the right “real” level for the rupee (accounting for domestic inflation), to optimise the complex trade-off, is best left to the Reserve Bank of India, which has the expertise and the information to strike this delicate balance. The rest of us must desist from creating false shibboleths of national strength. Our strength is best demonstrated by balancing our trade account without imposing prohibitive import or export tariffs; making our budget revenue surplus so that borrowings only finance investments and by following a need-based strategy for allocating resources for human capital development and social protection. None of these three milestones have been achieved yet.

collaboration

Grow up well India, collaboration is better than conflict; maximalist negotiating positions are self-limiting and the high from winning has diminishing utility unless the agenda ahead is compellingly uplifting.

Adapted from the authors opinion piece in The Asian Age, August 19, 2018 http://www.asianage.com/opinion/columnists/210818/grow-up-india-time-to-set-an-uplifting-agenda.html

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Unbundling State effectiveness – current perspectives

August 19, 2018

dreams

Context is everything. No one model exists of an effective State. Hugely diverse countries like India can benefit from a modular approach enabling sub-national jurisdictions to shape their State architecture taking into account their context, the available resources and their dreams. The last is important. “Dreams” -as opposed to short-term ambition- are a mix of inherited drivers for action. They determine who we want to be- a long term goal. Consider, that in the long term – any period after 20 years – every factor of production that appears fixed today -technology, natural resource use, and human capital- can be changed.

Core sovereign functions

A large part of the modern sovereigns effort relates to overcoming negative “externalities” (war, insecurity, crime, environmental degradation) or enhancing positive “externalities” (sanitation, public health, basic education, transport, energy and communication networks). An externality is a cost which cannot be allocated to any one entity or a benefit which is not enjoyed by just one individual. This results in the need for “collective action” to finance and execute plans to deal with externalities.

Dealing with the problem of “collective action”

Using State executive agencies to deal with externalities was the pervasive form of “collective action” till the 1970s. Experience shows that those State interventions, which work “along the grain” and align with public sentiment are effective. Consider the baffling, continuing insecurity in Kashmir despite a massive deployment of security forces. A wider domestic and diplomatic engagement with the root causes of Kashmiri disaffection could help. Note that in sharp contrast, China deals with Uigur resentment in its Xinjiang province with a heavy, repressive hand. If the Economist is to be believed, it keeps 1 million Uigurs – more than 10 per cent of this Muslim minority group- in detention camps for “re-education”.

Hybrid options for “collective action”

Hybrid options for “collective action” have emerged over the last four decades. These unbundle the core sovereign functions from those which can be undertaken by private entities. Private contractors perform even routine security functions; lease out, maintain and even operate equipment for government agencies. Government can get things done by others rather than do them itself. But using this model extensively requires government agencies to change its skill set from project implementation to project design, contracts, finance and monitoring. There is insufficient evidence that government is making that transition. Public Private Participation (PPP), with the private sector putting in capital and bearing the implementation risk, has died in India.  Government was unable to make the functional transition to design and manage contracts effectively for mutual gains. Private investors used the mechanism as a way of earning riskless returns using bank loans. The term “Public” in PPP gave banks carte blanche to extend loans to “lemons”- projects with dodgy financials.

Bridging information asymmetry

Managing information asymmetry is also a key sovereign function to reduce the transaction costs to efficient levels and allow market to grow. Legislating standards like “weights and measures” makes trade more efficient; making rules for disclosures on operational and financial results by business, makes stock markets more efficient; regulations for public disclosure of product contents, as in medicines and food, protect public health. These are “in situ” measures to bridge the information gap between buyers and sellers within a given market structure.

Making markets competitive

Non -competitive markets induce inefficiency and impede growth. On the supply side, the government’s job is to avoid cartelisation by existing suppliers and regulate the level of market dominance of individual suppliers. The Competition Commission of India, backed by appropriate legislation is the vehicle for doing this.

Aggregating demand is the flip side option to keep markets competitive. User’s cooperatives are one traditional option. Government owned demand aggregators, like the Energy Efficiency Services Limited (EESL) are another option. EESL reduced the retail sale price of energy efficient LED bulbs by 75 per cent over 2012 to 2015 just by buying and distributing at scale. Private demand and supply aggregators like Amazon and Flipkart are newer options which operate like mini-markets reducing transaction costs for both sellers and buyers.

Markets – building blocks of the future

Global ideological polarisation around the usefulness of markets for reducing transaction cost and spurring competition via innovation came when China, under Deng Xiaoping adopted, in 1979, what later came to be known as “capitalism with Chinese characteristics”. Collapse of the Berlin Wall in November 1989, signalled the end of Soviet Union style socialism and the ensuing ideological polarisation around markets.

Bumbling liberal democracy versus totalitarian efficiency

Political Science became simpler post 1990 as nations clustered around two major clusters. The larger chunk consists of nations which align with, or aspire to, the western model of governance – democracy, multi-party elections, citizen rights and public sector governance reform to minimize the direct intervention of the government in the economy. India fits squarely into this set.

A smaller set of nations, with China in the lead, subscribe to the supremacy of the Party as the mediator between the State and the people. State control remains pervasive via public investment and Party cadres in key positions in the private sector. The “national interest” dominates citizen interest. Controls on family size (till recently), continuing controls on domestic migration and a weak judiciary are the downsides.

The “middle kingdom” shines

china shine

The spectacular economic success of China over the last four decades, including in reducing poverty below 3 per cent, provides powerful evidence that the State can function as effectively as the private sector. This model produces results but also future tensions in an artificial short-term, trade-off between citizen rights and economic progress. If development empowers people, how will a system based on the sacrifices of the many for a few, shake-off the bonds of political subservience it engenders?

Listening to discordant voices or ignoring “noise”

China has the managerial freedom to implement decisions without catering to the “noise” from political opponents or muted public opinion. Curiously, this is not too different from what Elon Musk, the founder of Tesla wants. By taking Tesla private he can avoid the relentless scrutiny of shareholders and the discipline of market expectations.  In India the need for consensus is a brake distorting efficient solutions. Consider the case of the Goods and Services Tax.  The GST, an efficient tax reform, languished for over a decade. In 2016 the Union government conceded managerial ground to the GST Council. It agreed to make implementation “revenue neutral” for state governments. A back stop Union government guarantee protects against short fall in tax revenues. The potential risk of “moral hazard” is the risk.  Multiple tax rates, knowingly sacrifice the efficiency gains from a single rate of tax. But the architecture now exists; systems are stabilizing, the rates can be adjusted based on experience. Listening to the people via the state governments has paid off.

Living with the “nuisance” of judicial review

China has no patience with judicial review of its decisions. This makes the government and the Party supreme. India is a liberal democracy, even though we chose to call it “socialist” in 1976 via an amendment to the constitution. The power of “public interest litigation” effectively restricts the ability of the government to undertake significant change, except via constitutionally aligned legislation.

The initiative of the Vajpayee government to privatise State Owned Entities in 2000 quickly ground to a halt. It became impossible to implement the legislative changes required to change the public ownership of state owned enterprises like ONGC, what have statutory status since 1956 or banks, which were nationalised by legislation in 1969 and select private industries nationalised in the 1970s.  “Reform by stealth” – the Indian approach, truly has its limitations.

India, stolidly elephantine moves

Elephant

It is instructive that one and a half decades after electricity reforms were initiated in 2003 there are privatised electricity distribution utilities in the national capital of New Delhi but a State Electricity Board, created under the Electricity Supply Act 1948, continues to function in the state of Kerala – the last bastion of the Left.  India assimilates multiple ideological regimes, per the local context.

Local governments bring innovation and accountability

Successive Finance Commissions have devolved more resources and responsibilities to local bodies. But Panchayati Raj, the third level of government, embedded in the Constitution in 1992, remains sparingly implemented. One third of the annual growth in the pool of Union tax revenue must be incrementally, directly devolved to local government, as shared benefits. This will enhance local ownership of the growth process and facilitate empowered grassroots leaders to grow into future national leaders.

A nation of itinerants

train stations

Decentralisation brings to the fore, multiple potential threats – the problem of equitable allocation of funds; ideological permissiveness and political dismemberment. These are real threats.  But India has stabilizers built into the constitution– free migration and the rule of law. So long as our laws promote non-discrimination and equality, the market for work and liveability will make a person vote for national integration with her feet and move to a place, where she feels secure and productive.

One fourth of Indians do not live in the place where they were born. This is why the Aadhar unique digital identity, with appropriate safeguards for private information, is vital to secure seamless access to public services anywhere in this country of itinerants.

There is a curious dichotomy today. The world looks at India as a major determinant of its future. But we, within India, are still staring at our navel awaiting enlightenment from without. It is time we claim our place in the Sun by making our actions speak for us.

 

From the authors opinion piece at the Law School Policy Review, gust 19, 2018 https://lawschoolpolicyreview.com/2018/08/19/unbundling-state-effectiveness-current-perspectives/

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Grandfather stranded power assets equitably

August 10, 2018

Coal

Economic reform has few friends. This truism is visible today as the 2003 de-licensing of power generation capacity is being unfairly fingered as the culprit for the Rs 1 trillion bank debt turning delinquent due to pending or actual bankruptcy of the power projects.

De-licensing of power generation delivered what it was supposed to – capacity addition in thermal generation exceeding the planned capacity addition over the period 2012 to 2017 by 30%. Fingers are also being pointed to low coal production or the prohibitive price of imported gas as additional culprits. This is disingenuous.

Drivers of stranded power assets

The primary reason why installed generation capacity remains underutilised is that distribution utilities have failed to develop new markets for electricity and are stuck at unreasonably high levels of operational inefficiency. The CRE/ICRA 6th Annual Rating for Distribution Utilities July 2018, rates just 7 out of 41 distribution utilities with a satisfyingly high performance. But remember that rating standards in India are contextually determined to offer an incentive for improvement. Lowering transmission and commercial loss below 25% accrues incentive points. International standards would be way better.

The average loss in distribution utilities, during FY 2016, after accounting for subsidy received from government, was Rs 0.65 per unit (kWh) sold. Is it any wonder then that distribution utilities have failed to absorb the available supply of electricity. Actual users have to undergo forced power outages till the utilities can generate cash to pay for purchasing electricity from the grid. Constraints on the supply side have been unplugged by reform. The problem lies in stodgy utilities failing to aggregate potential demand.

India night lights

SHAKTI a transparent, effective resource allocation mechanism

Union government steps for reducing financial stress in the power sector date back to 2017. SHAKTI (Scheme for Harnessing and Allocating Koyala (Coal) Transparently in India) skillfully used the auction methodology to allocate up to 80% of the assessed need for coal supply to 11 generators (31 entities applied but only 14 were found to be at a reasonable stage of project completion) . Generators without any coal linkage, bid for coal supply from Coal India Ltd. by agreeing to reduce their approved levelized tariff , thereby sharing the gain with their customers. Bids for reducing tariff by 4 to 1 paise per unit (kWh) were received. This was commercially smart rationing of coal supply to favour the most efficient generators.

RBI shakes complacent defaulting promoters awake with looming insolvency

Debt Recovery

Why has the debate around stressed power assets gained currency today? Election time, which we are clearly into, is a good time to press for benefits. This applies to requests for extending the time period beyond the 180 days allowed to promoters to rectify a loan default. Under the Insolvency and Bankruptcy Code 2016, promoters or their associates, become ineligible to bid for the assets during resolution proceedings. This severe penalty is meant to spur promoters to fulfil their loan repayment obligations and pay banks back on time.

Timely negotiated settlements better than the judicial option 

Draconian penalties are of little use when the default is due to a systemic shock. The Enron private power fiasco 1992-1999 was sparked by spiralling of imported gas price. Negotiations, rather than judicial options, finally resolved matters. In 2005, NTPC, GAIL and MSEB acquired the assets in Dahbol, Maharashtra abandoned by the bankrupt US company.

Enron solution redux- neither desirable nor feasible

Dahbol involved only 2GW of abandoned assets. Today, 10 GW of gas generators are stressed, like Enron. In addition around 12GW of coal fired generators are also stressed after excluding those which have benefited from the SHAKTI initiative. The stranded asset problem is more than 10X of the Enron problem. The bank loans – mostly of Indian banks – at stake are around Rs 1 trillion. Is there a way out causing the least disruption to embedded economic incentives?

Reduce the cost of coal based generation by lowering the implicit and explicit “tax” imposed on it.  

The most direct route would be to end the extortive levies on coal production and transportation by rail. Rahul Tongia and Puneet Kamboj of Brookings India recommend making the railway freight charges cost reflective. This would also make Indian Railways competitive with road transport, to which it has been losing market share.

Currently, coal transport by rail is charged more than the cost of service. This is an implict tax on freight which subsidises passenger traffic. The resultant excess freight cost feeds into the cost of electricity generated. This increases the cost of electricity by Rs 0.21 per unit (kWh) amounting to Rs 108 billion per year.

In addition, there is an explicit tax on coal via royalties, levies and coal cess. These increased from Rs 200 per tonne in 2011 to Rs 800 per tonne in 2017 pushing up further the cost of coal based power.

Why should electricity consumers pay to subsidise rail passengers?

Quite unfairly, it is the honest electricity user who is indirectly subsidising rail passenger traffic – that too in a poorly targeted non-merit way. Freight charges should become cost reflective and the levies on coal production reduced to Rs 400 per tonne. IR should generate the additional revenue required for keeping passenger fares reasonable, from commercial development of their physical assets.

Subsidise rail passengers explicitly via the budget

There is also a good case to use the revenues from coal cess and other levies for this purpose. Rail transport is more efficient and environmentally less toxic than road transport. Switching to electric rail from road, reduces the import burden imposed by using petro products. A direct subsidy of Rs 150 billion should be allocated to IR specifically for adopting cost based freight charges in the 2019 budget. Lowering the cost of coal based power will improve the finances of distribution utilities and enable them to buy more power, which would feed into the financials of coal based generators.

Spread the pain of low availability of domestic fuel across all thermal power generators

Why not replicate the SHAKTI auction template to allocate a portion – say 50% – of the annual coal demand to all generators (those owned by the Union, state governments or the private sector) whilst retaining the existing allocations for the remaining one half. Electricity prices at the grid would reduce. The principle of price competitiveness (electricity supply) as the door to preferential access to scarce domestic coal will incentivise all generators to become efficient.

competition

Grandfathering existing contracts is the gold standard of contracting norms. But extraordinary circumstances call for innovative options. When the available resources fall short of demand, the principle of efficiency of resource use overrides historical rights in a merit order system. New generators win the efficiency battle, hands down.

Adapted from the authors opinion piece in TOI blogs, August 9, 2018 https://blogs.timesofindia.indiatimes.com/opinion-india/equitable-grandfathering-needed-in-thermal-power/

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Book Review: For Reasons of State

August 5, 2018

For reasons of state

India is a young nation. Three fourths of us probably have no recollection of the ravages of the Emergency period from January 1975 to March 1977.

This book was first published in 1977, just after the national elections, called by Prime Minister Indira Gandhi – in a bout of self-delusion as a referendum on the Emergency, swept out the Congress – they lost all seven parliamentary seats in Delhi – and brought in the lightly glued together Janata Party.

The authors, both veteran journalists, describe their work as an “investigation into the workings of (the) monstrous administrative machine during the Emergency and the devastation it left behind”.  It is a perfect informational tool – not just a blend of statistics and a chronological listing of events. The authors say they chose “to be accurate rather than sensational”. But the level of granularity they uncover in their investigations and the lively characterisations they add, make people and events come alive, giving the narrative a gut wrenching, virtual face-time feel.

Cashing in on current trends

Why re-publish the book now?  It is the fortieth anniversary of the Emergency. But that seems less than sufficient reason, even though the new version has a foreword by the celebrated “Indian” journalist, Mark Tully. The authors perceive a salience – the potential for constitutional subversion under today’s majority government, just as it happened during the Emergency.

The muscular track record of the Modi government and its commitment to implement deep political change evokes a visceral fear, amongst those, who apprehend that a major constitutional change can negatively impact minorities and the marginalised. The liberal order is being challenged universally, which heightens the fear that India is no exception.

Is India under a virtual emergency today?

Mark Tully points out that drawing a parallel between the Emergency and the situation today is illusionary. This assessment resonates well. Citizens voted overwhelmingly for the BJP in 2014. But the Congress has also been re-elected with a majority in the past. But each time, events conspired to temper authoritarianism. Today the BJP remains in a minority in the Rajya Sabha.  A vociferous, albeit small, opposition is active in Parliament. Democratic safeguards have actually worked. Consider Uttrakhand, where the judiciary quashed an attempt to impose Presidents rule in 2016. In Bihar 2015 and in Karnataka 2018 non-BJP governments were elected, illustrating that electoral rights remain intact.

Tully also opines that unlike the Emergency, today there is an absence of widespread anger. However, fear of a vigilante backlash or the termination of government largesse via advertisements or project funds, has muted criticism of government by non-government organisations and driven some of the mainstream media to self-censorship.

The authors believe that there are strong personal and institutional characteristics shared by the Indira Gandhi and the Narendra Modi governments. A massive mandate to rule is one such. This inevitably emboldens leaders to take strong, decisive action. There is also a desire to move quickly for results. Shackled by lumbering institutions, charismatic leaders seek to short circuit public processes. In doing so, they bring in trusted advisers, not accountable to the public – Sanjay Gandhi in the case of Indira Gandhi and the RSS in the case of the Modi government. Curiously, however, both these widely disparate centres of extra-constitutional power seem to target Muslims and Dalits.

Wannabe Lutyens denizens, charlatans and craven officials abandoned public interest 

The most interesting aspect of the book is that readers are invited to be flies on the wall, whilst dodgy decisions are taken by the high and mighty of the Emergency days. The authors do not shy away from naming specific politicians, officials and wannabes like “Begum” Ruksana Sultana, who were all actively complicit in subverting the rights of citizen in Delhi.

Ruksana Sultana

Nasbandi (forced sterilisation) and resettlement of slums were the key disrupters of social contracts and civic responsibilities during the Emergency. Slums were levelled overnight. 7 lakh hapless residents were transported to 27 resettlement colonies on the outskirts of Delhi with little more than 25 square yard demarcated plots and patchy one room houses. But under-provisioned sanitation facilities and drinking water, no markets, no access to health care or schools made these peri-urban deserts, seem designed to make the poor disappear and leave Delhi looking green and beautiful. They bred disease, death, and anger. In the 1984 organised hate crimes against Sikhs, it is these resettlement colonies like Trilokpuri and Mangolpuri, where the worst atrocities were committed.

Two perceptive chapters dwell on the travails of the Delhi police and the reasons behind its ready capitulation to manipulation by politicians during the Emergency. Imaginary threats were materialised and minor criminals magnified into severe security threats. Tragically there have been too many “Dacoit” Sunders (a Delhi badmaash who was built up into gun toting dangerous gangster, later captured by the police) who, like “Sant” Bhindranwale, in Punjab, were manipulated into larger than life figures only to meet their untimely end in a burst of righteous police action.

If a grim account of abandoned constitutional responsibilities, grossly violated official procedures and craven official machinations for personal glory can serve to entertain – this is it. Whether it puts readers off voting for the BJP or impels them to do exactly that, remains to be seen.

Adapted from the authors book review in Business Standard, July 31, 2018 https://www.business-standard.com/article/beyond-business/intimations-from-the-emergency-118073100018_1.html

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Book Review, bureaucracy, corruption, Democracy, India, Indira Gandhi, politics, RSS

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