governance, political economy, institutional development and economic regulation

The San Jose window

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So what did the Silicon dudes, collectively representing around $500 billion in purchasing power, think of the case placed before them by the self-made, roughhewn yet charismatic Indian Prime Minister — the man with a penchant for the dramatic?

From the looks of it, they thought he was kosher. Someone they could talk turkey with. Of course they are pretty constrained in what they can do. They are businessmen — oddly all of them are men. Inflating their egos and appealing to them for “help” can soften them a bit. But, ultimately, business folks live and die by the shareholder wealth.

The good news is that India fits in well even on this metric. We have the numbers. We shall be the most populous country by 2030. More importantly, each of us would also have decent purchasing power by then — Prime Minister Narendra Modi wants each of us to have $13,500 per year in today’s value terms.

This is improbable. But even if we get to just half of that, which is possible, we would be as “well off” as China is today. That is not very rich by the standards of the rich, but definitely upper middle class — no mean achievement for a country whose diplomats still, habitually swear by the begging bowl approach in international negotiations.

An additional $50 trillion in purchasing power over 15 years makes all business drool — not just in the Silicon Valley. The annual revenues of the Fortune 500 companies is $ 12.5 trillion — a tidy sum that’s more than nine times India’s GDP. Okay, so now we know why all those kind business folk turned up dutifully to be with

Mr Modi. But why then did the Indian Prime Minister bother to go through with the dance? After all, if India is such an irresistible market, then shouldn’t the Fortune 500s be rushing in to occupy the 500,000 apartments which lie unoccupied today in India?

Two factors explain the asymmetry between the hubris at home and the fizz abroad.

First, Team India is a big ship. Stoking the fire in its oversized belly and changing course takes time. Until the crumbling “plumbing” is fixed, citizens will react to the bad smells reaching them. Fixing the leaks is still a work in progress as illustrated by the sermons delivered to the Prime Minister at his meet with the Fortune 500 crowd.

In contrast, business overseas view visitors much the same as co-passengers on a flight. This goes for both the older, preachy Fortune 500, who are classic bullies, or the more gentle, other-worldly yogis in Silicon Valley, adept at the “rope trick” of quietly raking in billions without a bottomline to support the extraordinary valuations of their stock. They will engage whilst the flight lasts, knowing they can end the conversation when they please. But anything more substantive is only on mutually acceptable terms — these being the “bottomline” for the “sunset community” in the Fortune 500 group and the “top line” for the Silicon geeks.

India presents more immediate potential for the “top line” obsessed Silicon entrepreneur. Their escalator is founded on growing the business, not solely much on growing profits. This is not to say that there are no profits to be made in India. But Asian companies from Japan, China, and Korea in sunset industries, are better placed to be responsive to the fragmented Indian market than a Fortune 500 corporate, which survive on scale not agility.


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It is no wonder then that whilst Prime Minister warmed up instinctively to the Silicon Valley crowd. The interaction with the “500 dinosaurs” was stiff, formal and somewhat resigned, as in a divorce case, where both sides talk at each other rather than with each other.

Thankfully, Silicon Valley is more vital for India’s urgent “development” needs than the czars of Wall Street, Detroit or Houston. San Jose and New Mexico is about disruptive innovation. This “value” shapes business processes, supply lines and determines who the next “legend” will be. This resonates well with the “individualistic” Indian.

The electron is the best antidote for exclusion — the proverbial mongoose to the snake of elite privilege and patronage. Digital access democratises access to information and knowledge especially if customised in India’s 22 languages. Connecting 600,000 villages and all educational institutions with broadband will provide Internet access to all.

Nandan Nilekani’s UID is a game changer which is being actively expanded for the direct transfer of subsidy and to ease public transactions. Its power lies in its ability to target public interventions narrowly, much like a micro-surgeon.

Digital access enhances communication and remote participation even in local events, a feature crucial for a country of domestic migrants, where 25 per cent of the people live away from where they were born.

The proposed digital archiving of individual data-identity, health and education records in secure “lockers” liberates the marginalised in particular who have no permanent residence, live in insecure places and are frequently required to produce these documents for temporary jobs and to access public services.

For the elite personalised service via human interaction elevates their own sense of entitlement. But a dalit, whose very shadow is abhorrent to some, may prefer an impersonal, indeed robotic, neutral, service provider, like an ATM which is available 24×7 to suit varying work schedules. Street dwellers will be the first to benefit from lower pollution if tele-meetings and remote work cuts the need to commute. The primary beneficiaries of tele-medicine will be remote villages where all they have today is the village “Bengali” doctor.

Information trawled from social media by specialist apps helps to counter terror, manage disasters better and get real time feedback on the quality of public services.

Digital India is the key to critical aspects of inclusive development, enhancing the “efficiency” of public investment and more “decent” jobs.

But this is not the real reason why Prime Minister Modi is happiest talking “new” technology. Behind his stern “Samurai” exterior lies a romantic, who believes that empowered individuals — the quintessential “Marlboro” person can change the world. To do this San Jose is a far better door to walk through than Wall Street. Don’t be surprised if you see him at the “Burning Man” festival — the new technology parallel to the old world Davos — a fun meet of the free spirited and those who imagine a better world, held annually in the Nevada desert, over the Labor day weekend.

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Adapted from the article by the author in Asian Age October 1, 2015

It all began 300 years ago with the ringing command of “Koi hai?” — Is anyone there? This being how the ruling, colonial elite announced their arrival at home, in the office or, indeed, anywhere, if there was no one to receive them. The immediate response was a servant at home, or a peon in the office, scurrying out with folded hands to acknowledge the master’s presence with “hazoor — at your service, Lord”.


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The services required could vary: Pulling the giant, overhead canvas fan to and fro with a rope; fetching a refreshing drink for the master; gently slipping off his riding boots whilst the master is sprawled on a “planter’s chair”; bringing in voluminous, cloth-bound, paper “files” or taking out those “disposed-off” by the master.

Becoming a peon was also, usually, the entry point in government service for most “natives”. You first got a job as a handy man around the master’s house, courtesy a trusted relative, and then graduated to the office, as a peon, if you were passably literate and could inveigle yourself into the master’s trust.

Things have changed somewhat, but not much, over the nearly seven decades of Independence, since 1947. The corridors of power are still lined with peons sitting outside the rooms of their officers, fetching tea or samosas, carrying “files” as they wind their serpentine way up, down and sideways amongst the officials who rule India today.

All this is accomplished without the “master” even uttering a word. Peons know their masters better than they know their own spouse or children. A glass of water or tea miraculously appears, visitors and even office staff are carefully screened for “priority” before they can meet the master. Lunch is unpacked from the “tiffin”, heated and served on time. Peons even take on the task of ensuring that sahib eats his medicines!


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Peons have long work days. Those attached to senior officers reach the officer’s home early to carry the files which have been worked on overnight, to the office. Their day ends only after they have carefully placed a new lot of files for “overnight disposal” on the sahib’s desk at home. In between they might have been instructed by the memsahib or, more likely today, mataji or behnji, to bring along some urgently required domestic ingredient that has run short, pick up the clothes ordered with the tailor or go by the Central Public Works Department office to check when they are likely to repair the fan in the bedroom.

For all the routinised drudgery of the job there are compensations:

The pay and dearness allowance (Rs 12,000 increasing gradually to Rs 20,000 per month) is twice what they’d get in a similar job in the private sector. Unlike the private sector, the job is permanent till you retire at the age of 60. 45 days of leave and 120 days on which the office is officially shut in a year along with medical and half pay leave.

Pay is 100 per cent indexed to inflation. Government contributes equally to your provident fund and pension and provides a handsome gratuity on retirement.

The job is not transferable, so you can grow deep roots where you belong.

Even if you goof-off, you are attached to a less important officer or an office where there is no public contact and, hence, very little prestige.

In 2006-07, nearly 26 per cent of the 3.2 million employees of the Union government and Union Territories were in the lowest grade — D, which applied to peons, safaiwalas, watchmen, mallis, packers or records sorters. An additional 67 per cent were in the higher grade, C.

By 2012-13, grade C (into which the lower grade D was merged in 2006) comprised 90 per cent of the 4.4 million Union government employees. 88 per cent of grade D positions were in departments which are spread all over the country — the railways, police, defence, civilian employment and the post office. These departments are physically spread across the country and therefore natural “sinks” for those seeking employment in grade C jobs which account for 90% of civilian employment.

It is not surprising that the demand for grade C jobs far outstrips the supply — sometimes up to 5,000 applications for every advertised vacancy. In comparison, for a grade A or B job (IAS, IPS and other central services), the number of applicants is a measly 1,000 per vacancy. Why this skew?

First, only 44 per cent of Indian students clear the secondary school stage of class 10, which is the bare minimum to apply for a grade C job of a peon. The completion rate falls dramatically in high school. Only 20 per cent of students enrol for tertiary levels. Consequently, the available pool of applicants is the highest for low skill jobs in grade C, particularly in Tier II and III towns and rural areas.

Second, officials in the lowest, merged grade C are compensated much higher than their private sector comparators, whereas grades A and B, which require higher minimum academic qualification of BA/BSc and are recruited through the extremely demanding Union Public Service Commission examination, are paid much less than their private sector comparators.

This irrationality is a throwback to our socialist past when “vulgar” income disparity between the highest and the lowest was frowned upon.

Third, as recommended by the 6th Pay Commission, 2006, grade D was merged into the higher grade C. Direct recruitment into the cadre of lower division clerk — a grade C entry level position — was discontinued and the vacancies reserved for promotion from the erstwhile grade D employees. This opened up promotion prospects for grade D employees via internal examinations to eventually become an assistant section officer through the “back door”.

Fourth, unlike in the past, the selection process is more inclusive and transparent. The Staff Selection Commission conducts an examination and an interview. This incentivises even those without patronage networks but with merit to hope for a grade C job.

But the new, over-qualified, hunting for fast promotions peons are unlikely to remain humble supplicants, as in the past, catering to their master’s every whim and fancy in a pale recreation of colonial grandeur. Once peons become “uppity” they will cease to have utility as well-paid extras in a period play. Low-skill jobs will be eventually outsourced, once government decides to restructure the public workplace. But till that happens, the rusted public sector “steel frame” will be held together by highly over-specified, grade C peons — the “nuts and bolts” of the government.

Adapted from the authors article in Asian Age September 23, 2015

Paris in December is not quite what it is in springtime. But who cares if someone else is footing the bill! Paris is the venue of the next Conference of Parties (COP), from November 30 to December 11. An annual jamboree that has been trying, since 1992, to limit carbon emissions and save the planet from what scientists predict will be the drastic impact of global warming and associated climate change. They have not succeeded thus far in taming emissions.

The plain truth on climate change

How much carbon space is left before disaster strikes is somewhat iffy and mired in science, negotiating stances and the “precautionary principle” which advocates that if danger lurks it is best to run rather than hang around assessing the extent to which you personally are at risk. Except that there is no place to run to.

Who’s to blame?

The problem is that whilst Americans and others in the rich countries are reducing emissions slowly, China, India and the rest of the developing world are eager to do exactly what the rich did earlier — use energy to grow their economies. This is fair, just and inevitable.

Can climate change be stopped?

The only way this can stop is if money is spent to junk the existing technology for producing and using energy and less carbon intensive and more efficient options are developed.

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But no one has a commercial incentive to do so. Most technology is developed in the rich world, which uses the most energy per capita and is the most heavily invested in traditional inefficient, carbon intensive energy chains.

They — Australia, Russia and the US are good examples — have preferred to milk their past investments in fossil fuel-based technologies rather than switch over rapidly to clean energy technology even though they have been talking about the problem in annual COP meetings since 1992. Thus, 20 of the 100 years available since 1995, to act, have been wasted.

To be fair, the northern European economies, including France, have been more conscientious than the rest of the rich and have reduced carbon emissions significantly by bearing the additional cost of doing so. Singapore is a stellar Asian example. It reduced per capita emissions by 66 per cent of its 1990 level.

But the rest, particularly the poorer, developing countries, have no incentive to divert their meagre fiscal resources to clean energy other than efficiency and local environmental benefits. But with so many competing priorities: stopping mothers and infants from dying due to poor health care; educating the young; creating basic infrastructure for trade and industry, just keeping energy — the life blood of a modern economy — flowing is tough.

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Existing agreements are insipid and ineffective

The Kyoto Protocol 1997, the framework guiding the interminable Conference of Parties meetings, lacks teeth. It fixed emission targets for rich countries till 2012 which were weak and inadequate because nothing more stringent was acceptable to the rich — a 6 per cent reduction over 1990 levels. But countries can opt out of the agreement. US, Russia and Canada did just that, making COP even more toothless and bureaucratic.

It’s now 2015 and the world has changed. Extremely wealthy people are to be found everywhere, not just in the earlier “rich” countries. Ruling political, industrial and commercial elites in developing countries have incomes and consumption levels which rival those in the “developed” countries. Poor countries often have very rich governments, though fiscal resources do not filter down to the poor. Traditional archetypes have transmuted. A billionaire from the Forbes List could be living on your street rather than in far off London or New York.


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So the continual “fingering” of rich countries as evil carbon emitters is unlikely to resonate. We are all responsible collectively for the mess we have created. To cut through two decades of verbiage and accumulated legal baggage two things must change.

Two options for delinking development from carbon

First, Paris must agree a common aspirational emissions target which all countries buy into. The level of the target, whilst important, is less so than all countries agreeing to shoulder the burden according to their capacity.

Second, till now we have depended on charity — aid from the rich world — to fund the technology transformation. This is degrading for the poor who have a right to access the available carbon space and inefficient, because allocation and priorities get warped when dealing with “free” money.

Next steps

Agree a common emission target

The world per capita carbon emissions were 4.2 metric tons (Mt) in 1990. This increased to 5 Mt per capita by 2011. The 1990 level is an excellent aspirational level to target. Most developed countries are above the 8 Mt per capita level whilst most poor countries are below 2 Mt per capita. Halving emissions in the developed world and allowing space for carbon emissions to grow two to three times in the poor countries seems a fair deal and a realistic target till 2030.

Improve the science of climate change

We also need to establish with greater the nature of the relationship between carbon emissions; global warming; extreme climate events and the distributional impact thereof. This is sorely needed to establish a sustainable aggregate emissions level which is neither unnecessarily restrictive nor ineffective in stabilizing climate. The next 15 years on top of the 20 years which have passed should be sufficient to hone the science.

Find the money: tax international capital transactions

A transactions tax to fund climate mitigation and adaptation is best. In depressed economic times, such as the present, a new generalized tax is abhorrent. But if the incidence of tax is tiny per transaction, individuals and entities may not feel its pinch. If it has a massive tax base on which it is levied the tax collection could be huge despite the low incidence. Mumbai lunch places, serving a simple, low priced, thali are as profitable as an expensive niche restaurant. The miniscule profit earned per thali is more than made up by the massive turnover. Of course the tax must be progressive and tax only the rich, who enjoy a disproportionate share in wealth creating growth-the root cause of climate change.

A tax on outbound international capital transfers from all countries meets all these criteria. A 0.01 per cent tax can net close to $300 billion annually. This is three times the volume of the 2015 replenishment of the Green Climate Fund proposed at US$ 100 billion.

The bulk of capital-outflow happens from rich or newly rich countries (like China). The purpose is to mitigate risk and increase returns. To insulate poor countries from the tax it could be levied only on those countries which are non-compliant with the emissions target. Since all developing countries, but very few rich countries, will be compliant, this leaves the poor countries out but snags the non- compliant rich. The tax collected would be transferred to a fund manager and overseen by an inclusive and representative board.

A tax puts a tangible cost to not meeting emission targets and creates a reasonable financial incentive for the rich countries. For example, it would reward Singapore for its stellar performance, whilst penalizing newly rich countries, like China, for exceeding the agreed level of emission.

Shared benefits follow shared responsibilities

China tellingly, has already announced that it would reduce emissions going forward. By 2030 they would be 60 per cent below their 2005 level. This should reassure all developing countries that it is possible to grow in double digits every year and still beat the carbon ceiling in future.

Developing countries should consider adopting the carbon ceiling volunteered by China. By volunteering a carbon ceiling they would be emboldened to press for a tax on outbound capital from non-compliant countries-mostly the rich. Of course ultimately every tax is paid by the final consumer- which will be the capital deficit poor countries. But a differential tax on capital flows does have advantages- it levels the field for domestic capital providers and dampens the fluctuating flow of destabilizing hot money into emerging markets.

Climate “warriors” headed for Paris should consider this proposition as they savour the Crottin De Chavignol served to them. Sometimes, the cobwebs have to be swept aside to see the light. There is much cleaning to be done at Paris.

Adapted from the author’s article in the Asian Age, September 17, 2015

1415 words

It is just as well that Finance Minister Jaitley was away in Turkey rapping with the G20 about “India’s strong fiscal fundamentals”, even as a small part of that fiscal stability was compromised, with nothing much gained, except possibly 20 million votes that the armed forces represent.

Faujis (armed forces) deserve better but not this way


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The approval of One Rank One Pension is a bad decision. This is not to say that Faujis don’t deserve a better deal. They do – particulars the officers. But succumbing to the OROP demand meant compromising on a sound principle. “Rank”- a level of command responsibility entrusted to a soldier, should only have historical and ceremonial value post-retirement. Associating pay, or even worse pension, with rank is indefensible.

OROP creates perverse incentives

Consider the perverse incentives rank based pay generates. First is the “toe in” incentive to just cross the rank hurdle and be equated thereafter for life. Not very inspiring. Second, rank as a basis for pay, is a huge disincentive for specialists – high quality surgeons, robotics engineers, pilots, staff on nuclear subs, missile technologists, communication specialists. These “geeks” may not have, nor may they want, the “command profile” that comes with a high rank. Civilians call such profiles “desk warriors”- being good at babugiri or administering power.

Two options exist-though both are bad ones- for getting around this conundrum. One-proliferate “Ranks”, as is done in civil service, to create a top heavy architecture but accommodate time scale promotions. Second-compensate specialists by adding on allowances. But this still does not protect their pensions. Therein lies the potential for a second bad decision.

India’s Chief Missile “Geek” and most loved, people’s President of India- late A. P.J Abdul Kalam – a role model for technologists in India’s defence forces. 


Army versus  para military forces- chalk and cheese

The third bad decision would be to extend the OROP principle to the Para Military Forces (PMF). Unlike the Armed Forces, senior PMF officers do not suffer the disabilities of their men, who live in much worse conditions than do the jawans of the army. The “in and out” rotation of officers from the Indian Police services and the lack of regimental tradition binding officers to their men are other differences. Most tellingly the “khaki” these forces wear, is stained by the disrepute that the civilian police has brought to that glorious colour.

Happily, the term of the 7th Pay Commission has also been extended up to December 2015 because it has much to mull over in the context of OROP. Here are five suggestions.

Who should pay for OROP?

First, OROP will cost between Rs 10,000 to 20,000 crores annually. This is not a killer. The money can be found over time. Fast forwarding disinvestment, including in the defence departmental undertakings, is an option. But it is a bad principle to sell the “crown jewels” just to service pensions.

The best option is to implement the “there is no free lunch” principle. The Pay Commission should find the money by cutting back on the pay increase it might otherwise have given to faujis. The OROP demand was for inter-generational equity- between those recently retired and the more aged veterans. It is only fair that what fauji pensioners gain should be paid for by faujis in harness today, by foregoing any anticipated increase in pay.

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On a life cycle basis faujis should have an edge

Second, assess the extent to which OROP corrects the post 1973 skew against the armed forces. Compare the pay and pension earned over an average life cycle of a fauji and a civilian, taking into account the shorter tenures and the fewer promotion opportunities of the former. If the skew persists, rather than an “edge” the armed forces should enjoy, this is the time to correct it.

Pensions and fiscal stability

Third, move explicitly towards fiscal sustainability. Since 2004, the government’s liability on pension stand capped at its “defined contribution” per new civilian employees. But the liability remains open-ended with respect to the armed forces who enjoy an assured level of pension. Is this the “edge” they should continue to enjoy? Fiscal prudence dictates that a “defined contribution” pension, as for civilians, should be the way to go even in the armed forces.

Find the fat in the army

Fourth, previous Pay Commissions, have refrained from suggesting rationalization of personnel- officer to jawan ratios; substitution of mobile strike capacity for “stand and hold” physical presence and clearer separation between the tasks performed by the army and the para military forces. This is where the fat lies to finance OROP. The army, which constitutes more than 80% of the pay and allowances and 90% of the pensions paid in the armed forces, should specifically be in the cross hair.


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China has just signaled its transition to a modern superpower by cutting 300,000 redundant, possibly “tail” related jobs, in the People’s Liberation Army, whilst simultaneously sharpening its teeth. India needs to do the same.

Government servants must not feed off the bottom half of India

Lastly, there is little justification for an overall increase in government pay in general. It has been 100% indexed to inflation since 1996. In nominal terms, the per capita net national income increased by 124% over 2006-2015 but the distribution of growth is skewed in favour of the top 50% which includes government servants. The salary including DA, of government servants increased by 113%.

Government servants likely increased their share of the national income, versus the bottom half of India, who do not enjoy automatic inflation hedging. But there has been no appreciable change in the quality of services provided by government to citizens over the last decade. Private employment has been hit by the global economic slowdown, jobs are scarce and inflation a continuing risk.

The bottom line is that the proportion of national income pie available for government salaries must remain capped. The combined share of the public sector (including parastatals) in national employment is barely 5%. Public sector pay must reflect performance and the market test.

Mind the gap please

The demand for government jobs is skewed-very high for unskilled, semiskilled work. But at the other end the Governor of the Reserve Bank bemoans that cutting edge economists are not available for public service. The armed forces face a shortage of officers against sanctioned posts. Doctors, nurses, good teachers, professors, scientists and engineers are similarly scarce. Children of government servants vote with their feet by preferring private sector jobs.

Public sector pay policy must first address demand supply gaps, before fiddling with the pay for positions and cadres where there is excess supply. These latter are usually those, where job entitlements are significant but accountability limited. The tail must not wag the dog.

Adapted from the authors article in Asian Age September 8, 2015:

Some more onions please

Onions comprise less than 1% by value of India’s agricultural production. The average Indian consumes less than 800 grams of the stuff per month. Onion is a seasonal fruit. Supply traditionally dips during July to September as only the stored winter crop, harvested around March, is available for consumption.

No dearth of onions


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India is the second largest producer of onions after China. We produce more than we need and export around 10% of production unless weather events adversely impact the crop. This year unseasonal rain, during harvesting, damaged the winter crop.

But demand is inelastic

Demand is relatively inelastic. Why don’t consumers say no when prices increase? First, onions are to palates in the North, Central and Western parts of India, what fish is to Bengal and curry patta and coconut is to the South. Food, chips even Uttapams taste better with onions. Onion, like Garlic, is also valued for its therapeutic value. Second, onions give a big bang for the buck. An average family spends around Rs 100 per month on the stuff. If price doubles, the burden is irksome but not a killer. Just economizing on pre-paid phone calls can make up the difference. But onion is the key savory for low income households.

It’s the politics stupid!

The fuss about onions is more about politics than economics. The political footprint of onions was established in the 1980 elections. Mrs. Indira Gandhi, on her comeback trail, after her post-emergency election debacle, shrewdly used the price rise in onions to drive home how uncaring of the ordinary person and how incompetent, the government of then Prime Minister Chaudhary Charan Singh had become. This clicked. The Congress won 67% of the Lok Sabha seats. In 1998, a sharp price rise in onions, dethroned the BJP government of Chief Minister, Madanlal Khurana in Delhi thereby establishing a new metric for good governance – the price of onions.

Delhi CM Kejriwal fingers the BJP for price rise

Delhi Chief Minister, Arvind Kejriwal has fingered the Union government for failing to control hoarding and speculation leading to the current price rise. Delhi government flooded Delhi markets in mid-August with onions at Rs 30 per kg. It plans to hold the price line just below Rs 40 per kg through public sector retail supply versus a market retail price of Rs 70 to 80 per kg.

Union government on the back foot

But the Union government claims this is too little and too late. More nimble footwork by the state government could have prevented the steep rise in onion prices in Delhi. The Union government had made available a Price Stabilization Fund of Rs 500 crore in April 2015 which state governments could use by contributing an equal amount to buy onions for retail supply at reasonable rates.

On July 2, when wholesale prices were still around Rs 20 per kg in Lasalgaon, Maharashtra-India’s largest onion mandi, the Union government brought onion under the Essential Commodities Act, thereby enabling stock limits to be enforced on wholesale agencies. It also enforced a Minimum Export Price of Rs 30 per kg to discourage exports.

In todays’ intensely adversarial, no-holds-barred competitive politics no government can ignore a public challenge. The traditionally business friendly BJP government, at the center, is particular sensitive when “hoarders” are fingered for the price rise. Maharashtra, Madhya Pradesh, Gujarat, Haryana, Andhra Pradesh and Punjab- all BJP/allies governed states – account for more than 60% of national onion production.

Grow more onions, reduce trade margins & transaction costs

Per a NCAER 2014 paper selected productivity enhancement can boost roduction. Three big onion producing states- Maharashtra, MP and AP- account for 50% of production but produce less than 17 kilo gram per Hectare against 27 and 21.5 kg/Ha in Gujarat and Punjab respectively. Again all three are ruled by BJP/NDP. Increasing productivity in just these three states can boost production by 20% ensuring sustained exports and no domestic shortages. Doing more on reducing the trade margin (better storage, faster transportation, lower market fees) can also leave more of the money with farmers whilst lowering domestic prices.

Clearly the government needs an effective and transparent mechanism, which provides the right price signals and rationalizes expectations for both farmers and consumers.

Killing export or killing farmers

Increasing the Minimum Export Price, as the government has done again this year, is the standard response. But such intervention in the market, even as it helps consumers by diverting supply to the domestic market, robs farmers of the gains from export. It also disrupts any attempt to develop export markets. Similarly, importing onions to keep consumer price low reduces the incentives for farmers to grow onions.

The fall back-leaky public distribution

But both these options are less intrusive than using the public procurement and subsidized retail supply template used for food grain. Such publicly managed mechanisms are invariably highly inefficient and ineffective with cascading losses in procurement, storage, transportation, distribution and retail sale. Sometimes inept government managed imports flood the market after the seasonal supply dip has passed and just as the new crop arrives- with disastrous impact on farmers’ incomes.

Can private distribution agencies do better?

Why not appoint a private trading agency for marginal but politically sensitive food crops, mandated to import, export or arrange for domestic distribution to balance market led demand and supply and keeping retail prices within a pre-defined retail trading band, which meets the twin needs of both farmers and consumers. This is what the RBI does for our currency to avoid excessive volatility.

Private trading agencies would charge a hefty commission for their services but it would be considerably less than the cost of direct administrative action to purchase, stock and supply onions along the Food Corporation of India model.

Onion diplomacy anyone?

Alternatively, use onions as a vehicle for building bridges with our neighbours – particularly Pakistan, which loves the stuff almost as much Punjabis. Why not negotiate a stand- by, bilateral onion supply agreement to meet onion deficits in either country on preferential terms? A similar arrangement is possible with our larger northern neighbor- China whose onion productivity exceeds ours’s. Onions can add a savory flavor to Track 1.5 – B2B- diplomacy.

Say no to expensive onions

Isn’t it high time the government bit the political bullet and said no to being bullied about the price of onions? They are not a necessity, which the sovereign is obliged to supply. The Jains don’t even touch the stuff.

To show that onions are dispensable, the entire cabinet should voluntarily say no to fresh onions during the lean period. PM Modi could launch a social media campaign to entreat well-off folks to substitute fresh onions with dried ones or switch to other seasonings, during the lean period. This can reduce demand and hence prices for those, to whom onions are the only savory they can afford other than salt and chilies.

The core of sustainable living is to adapt to what is seasonally available locally, rather than store, pack, can or transport food compulsively to cater to a menu plan made universally available but at a high cost to the environment.

Politics trumps economics hands down

But the catch is that Bihar is a big consumer of onions. People are unlikely to be amused if they can’t get their daily fix of onion, before they go to vote in November. This is one election the BJP needs to win. Visible, strong, centrally managed administrative action to lower retail prices is therefore likely to win over better options – after all the metric of good governance has to be met.

Adapted from the authors article in Asian Age August 31, 2015


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The Ganga is pure liquid crystal, dazzling in its brilliance along a thirty kilometer stretch beyond Shivpuri in Uttrakhand, flanked on both banks by unblemished white sand beaches or towering, forested cliffs. This is the best known haven for white-water rafting in North India.

Thanks to a bunch of intrepid environmental pioneers who made these magnificent beaches their karam bhoomi in the 1980s, two generations of nature lovers have since been groomed, to love and respect the awesome riverine environment of the lower Himalayas.

“Light handed” regulation grew the business

The ground rules for commercial use of this stretch of beach were first laid down by the Government of Uttar Pradesh in 1993 and thereafter supplemented in 1999 using guidelines recommended by the Government of India.

The outcome of has been a unique form of nature tourism which bars any permanent construction; electricity generation from fossil fuels and the use of detergents, chemicals or flush latrines. All this to ensure that visitors remain one with pristine nature.

A charming tented community spreads across nearly 100 separate campsites. These operate between October (after the rains) to May but are gone by the time the rains lash North India and the river waters rise to engulf what was till recently a medley of nature lovers.

The big advantage of the “light handed” government regulations is that they compulsorily create an environment which automatically keeps out those who are not likely to respect the environment. Using dry pit latrines rather than have access to flush toilets is one such surefire safeguard. Not allowing generator sets for electricity is another. Ensuring that soapy baths are not allowed on the porous sand is another.

Most of the campsites are run by those who either trained with the original river rafting pioneers or those who have diversified from adventure tourism into riverine environmentalism. Most camps use either forest or other government and village land after getting annual permits. They therefore have a vested stake in following the rules and no incentive to invest covertly in costly construction..

A rare pristine nook in crowded India


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River rafting across the rapids; kayaking and bungee jumping are the main attractions available for the young and energetic. But almost as emotively powerful an experience, for young and old alike, is to wade into the river and walk along the shallow water where pebbles gleam like diamonds in the clear sunlight, whilst tadpoles dart about and dragon flies drone harmoniously.

No need for bottled water here. Drinking straight from the many jharnas (springs) is de rigueur. Frankly even the river looks good enough to drink from, though this is inadvisable for those addicted to bottled/filtered/RO drinking water.

Just lie on the beach at night and stare up at the starry, starry night- grandeur unmuted, courtesy the absence of harsh, electric light, as the waters rush by soothingly and the forested peaks tower over you- alive with a symphony of insect sounds; the sighing of wind through foliage and the occasional rasp of a leopard on the prowl. Amir Khusro’s famous couplet about Kashmir “If there be heaven on earth, it is this, it is this, it is this….. may as well have been written for the beach life at Shivpuri.

Small start-ups and jobs

The Shivpuri river rafting community is also an economic miracle of spontaneous but sustainable economic development and job creation. Back-of- the -envelope-estimates suggest an annual turnover of around Rs 100 crores across all campsites. Additional direct and indirect employment would be around 3,000 skilled jobs for 200 days in a year.

More than 100,000 nature lovers enjoy the facilities here every year. Many of these are youngsters, brought by schools or their family, to savor the sustainable life style of camping under tents with basic comforts but without the odious opulence of luxury resorts, which are a sure proxy for poor use of natural resources.

The Shivpuri experiment has grown organically. But as with all start-ups once the product matures and becomes viable it is eyed by big business and also the government. The former looking for a cheap buy-out, the latter for more revenues.

Legal notice from National Green Tribunal

Unsurprisingly, the campsites are presently contesting a petition filed by an NGO before the National Green Tribunal (NGT), which alleges that environmental norms are being violated by the camps.

Camp sites are made available every year to the incumbents if there is no violation of the 1993/1999 guidelines. This is exactly what big business may want to do.

Big business and the environment

The bogey of environmental degradation can be raised to evict these 100 camps from the beaches and replace them with a few, exclusive luxury, tented camps instead.

The argument, as always, could be the unsustainable biological load that 100 small camps and 100,000 visitors per years are imposing on the water quality and wildlife in the surrounding forests. Luxury facilities, chemical toilets, flush latrines, air conditioning, fancy menus and upgraded suites can attract a better “class” of tourists who would pay three to four times more than what camp operators charge today. Most of today’s visitors would be priced out. But it can be argued that fewer tourists would be good for retaining the purity of the sacred Ganga. This is a familiar albeit fallacious argument that to preserve the environment we need to exclude people from it.


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Larger luxury camp sites would be able to commit to treating the sewage and waste that luxury camps produce. They would be easier to police since they would be few in number albeit with a larger ecological footprint.

Is government committed to support riverine tourism start-ups?

The government may also seemingly prefer fewer camps. They may also suggest that to maximize revenue generation and bring in transparency, campsites should be auctioned to the highest bidder rather than re-allotted to incumbents as at present.

Alternatively the government might have other plans. It may wish to covert these pristine river beaches into bathing ghats (stepped river banks) for pilgrims, in keeping with the growing popularity of religious tourism.

The end of living with nature

In either case the unique Shivpuri river rafting experience will be extinct. Over taken by organized business or by the devout, eager to expiate their earthly failings by seeking the blessings of Ganga maiya.

Also doomed could be the government’s 1993/1999 “best fit” governance style of “light handed” regulation – fixing a problem without killing what grew organically.

Competition will also take a body blow, as will small business, if exclusive luxury resorts replace the higgledy piggle spread of campsites.

This would put an end to a nearly three decade old incubating site for future nature lovers and environmentalists.

Religious tourism crowds out the environment


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A unique opportunity for learning to love and live with nature will disappear if public bathing ghats are the future. The devout tend to miss the trees for the wood- so focused are they on the task of completing their riverine rituals and getting home. The institutionalization of the pilgrimage to Vaishno Devi in Jammu; Amarnath in Kashmir or closer home in Haridwar and Rishikesh are good examples of nature taking a back seat versus devotional rituals.

Saving riverine tourism from commercialization

But most importantly this will be the end of yet another opportunity to keep India’s riverine environment alive. Silting of the major rivers in the plains has killed what could be a thriving white-water shipping industry. Race boats in Kerala during Onam are now oared by people from the North East since it is too much work for the locals. The famous inland cruises are now motor powered and as noisy as any highway. The barges that the landed elite of Bengal used to sail up the Ganga have long since been recycled into antique furniture for homes with a taste for the past. We have forgotten how to live with a river, a lake or a pond. The shutting down of Shivpuri will complete the amnesia.

The only hope of avoiding this depressing possibility is if the NGT endorses the existing model of supporting riverine tourism start-ups through “light handed” but effective regulation albeit with stricter enforcement; periodic checks of water quality downstream of the camps and financial penalties for violation of norms. The ball is now in the National Green Tribunal’s court.

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Indian angst

Abandoned Faujis

abandoned faujis

Delhi. Fauji veterans agitate, unsuccessfully thus far, for implementing the One Rank One Pension principle. This is a promise, unadvisedly made to them, by both the previous and the present government. They boycott the celebrations commemorating the 1965 war. Even those who fought to win that war stay away effectively devaluing the event. An unintended and unfortunate outcome is that scores of disciplined ex-soldiers and one prominent fauji brat get on-the-job training, on how to enter politics to safeguard your rights.

Mandal revisited


Ahmedabad. An angry, young man clad in faux fauji combat fatigues, conducts a caste maha-panchayat of half a million Patels. The occasion is the demand for inclusion in the list of backward castes, eligible for affirmative action (reservation) as a fast track route to a government job or admission into schools and colleges. The young leader’s social media profile has him posing with a gun in hand-very much like Bihar’s notorious upper-caste Ranvir Sena or the face-book friendly young militants in Kashmir today.

Life on the edge

Mumbai, the city of dreams, a sordid, family drama unfolds of a possible filicide; secret serial marriages and shady doings, so bizarre that it could only happen in star crossed Bollywood.

The Proletariat strikes back


Across India, labour unions prepare for a general strike of all workers on September 2 to express their rage. The cause- dissent against dilution of the regulatory ambit of the labour laws; opposition to privatization of State Owned Enterprises and Foreign Direct Investment in Railways, Insurance and Defence; support for regularization of contract workers and the demand for better social protection measures.

Were all these happening in the 1970s it would be pretty commonplace in that decade of social unrest and hartals. But this is 2015, with a stable BJP government in place and more than half way through the first quarter, of what was once touted, as the India Millennium.

Have we than gone horribly wrong already even before we have begun? or is there a grand design behind this ripple of disquiet?

Has the OROP been deliberately allowed to fester so that it can be settled, with a flourish, just prior to the Bihar elections with the personal intervention of the PM, making the fauji vote thereby indebted to him?

Is the Patel agitation merely a manufactured storm? Is it calculated to subside with strong and reassuring intervention from Delhi to help the floundering Chief Minister Anandiben, thereby reinforcing the “strong leader” image of the PM?

Is the impending general strike and the prospect of extended labour unrest; lost jobs and forgone income, meant to scare voters in Bihar into opting for stability and the BJP, rather than taking a punt at the alternative politics of the rag-tag combination of Nitish Kumar, Lalluji and Arvind Kejriwal?

Truth is stranger than fiction, so none of these scenarios can be summarily discounted. But one thing is clear. The government needs to tighten its boot straps if it is to be an instrument of economic and social change.

Four priorities emerge:

Legally correct but bi-partisan

First, the rule of law must prevail in spirit. This is not yet visible. Using the letter of the law for one’s own ends is not the same as the rule of law prevailing. The golden rule is to err on the side of administrative effectiveness, simplicity and comprehensive reading of the law. Delhi presents an opportunity. The electoral mandate of the Delhi government is unquestionable. Respecting it and developing a positive functional relationship with it is in the long term interest of democratic governance. After all in every harmonious family-as the Speaker Mahajan of the Lok Sabha views Delhi to be- the youngest – even a rebellious, member’s foibles are accommodated.

Where are the tough economic reforms?

Second, clear signals for undertaking tough economic reform are a must. This is a government which garnered far reaching support on the basis of its reformist credentials. The government agenda is long on “win-win” options but not so impressive where there is no option to causing some pain. Initiatives crying out for attention are- (a) restructure electricity utility debt to make them financially viable; use the energy and commodity price decline to move to a “hands off” regulatory regime for energy prices; (b) make State Owned Entities/Public Sector Banks autonomous. Delink them from the control of their administrative ministries. (c) Enhance government effectiveness by boosting the availability of specialized, functional skills at decision making levels. The absence of even a game plan towards these objectives is worrying.

Make one, keep one-the mantra for government employees

Third, make jobs not skills. People learn better on-the-job. Medium, Small and Micro Enterprises (MSME) are ideal for maximizing the jobs per unit of capital. Facilitate them by- (a) Ensuring metered supply of 24X7 electricity on priority feeders (b) Supply electricity at the actual cost of grid supply (c) Provide incentives for such businesses to meet environmental standards. Forge a compact with state governments to make the rural development, panchayati raj, labour and industries department staff focused on employment and migration at the Development Block level. Encourage monitoring using rapid survey techniques. Remember what is monitored gets done. Reward Blocks which excel at growing employment in MSME. These measures fit well with the financial inclusion and social protection initiatives already underway.

Junk the colonial district management architecture

Fourth, change from the bottom-upwards is always the prudent way to start. End a relic of colonial rule, under which the District Magistrate is mandated to exercise oversight of the police via judicial powers under the Criminal Procedure Code. It is high time that the Police Commissioner system, already functioning in metros, is extended to all districts. The district level civilian administration would consequently be free to focus on development- for which they are best trained and equipped. This simultaneously empowers Police Officers and makes them squarely responsible for maintaining law and order- an unpardonably ambiguous mandate today. It also kick starts the process of modernizing the somewhat creaky, colonial legacy of district level general management- often the missing link in speedy implementation today.

The calendar from now to 2019 is chock a block with state assembly elections starting with Bihar later this year. The die has already been cast, the major populist decisions have been taken, including special aid for Bihar and Smart Cities. Now the outcome will depend on smart vote management- an area where the BJP excels. Time to strategize on improving the knotty fundamentals of growth and development with decisions kicking-in as soon as the votes are cast in November.


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Ex-servicemen are angry that their attractively titled demand — one rank, one pension — is not being implemented by the government. OROP as a “brand” is a huge communication success, hitting all the right buttons — simplicity, easy comprehension and being evocative of equity.

It is not surprising therefore that Prime Minister Narendra Modi adopted it in his election campaign. The United Progressive Alliance, caught napping, made a notional budgetary provision in February 2014, but did not survive the general election to be held accountable for its implementation. This pledge was repeated by Prime Minister Modi from the ramparts of the Red Fort on August 15. But fauji pensioners were not impressed.

Top babus, secretaries to the government and generals retire at a fixed apex pay since the Fifth Pay Commission (1996). Their pension increases to reflect all future revisions in apex pay. Those retiring below the apex pay have to make do with pension revisions at 50 per cent of the minimum of the revised pay scale, even if they retired at the maximum of the pay scale. Hence the inequity. Babu and fauji apex level officers thereby invite the charge of being self-serving.

A bit of history here. The armed forces have traditionally enjoyed an “edge” in the compensation they get versus civilians. The logic for the premium is accepted and remains rock solid even today.

Till 1973, fauji pay was reviewed separately. The 1970s were bad times for all government servants. Faux socialism required that government salaries be stagnated in the name of removing poverty. But the axe fell most heavily on Army pensioners via the Third Pay Commission, 1973. The result was that the payout ratio (the proportion of last pay to pension) for fauji and civil pensioners was made the same — 50 per cent — by reducing the fauji payout and increasing the civilian payout.

Real basic pay under the Fourth Pay Commission (1986) doubled, but inflation adjustment was only partial. The Fifth Pay Commission (1996) doubled the basic pay and provided for 100 per cent inflation indexing including for pensions. This fixed the earlier problem of pension not keeping pace with inflation. The Sixth Pay Commission (2006) tripled real pay. Whilst this was necessary, it stoked the angst of pensioners, other than the creamy layer, because pension adjustments lag behind salary revisions. With every pay commission, pensioners fall further behind. Only faujis have led the agitation for OROP, possibly because of the high regard the public has for them versus a less than rosy public perception of other government employees.


The principle that fauji salaries must have an edge over civilian salaries has been consistently accepted. Suitable salary scales exist to illustrate this “edge” of around 10 to 15 per cent of basic pay. But in a classic case of maintaining the form whilst subverting the spirit, the benefits of the designed “edge” are only notional and not real. Here is why.

First, the sharply pyramidal structure of the armed forces limits the potential for promotion. In comparison, the civilian cadres are much less sharply tapered. Since pay is still effectively linked to position or rank, this means that civilians’ pay outgrows the notional salary “edge” over the first 16 years of their service. Thereafter, they lead not lag the fauji pay.

Second, stringent health requirements also ensure that faujis retire much earlier than civilians. Estimates suggests that 60 per cent of fauji officers retire by the age of 54. A soldier retires at the age of 35, while other ranks retire by the age of 45. In comparison, all civilians carry on earning promotions and pay enhancements till the age of 60.

Shorter service spans and fewer promotion avenues ensure that at retirement faujis have a basic salary which is around 40 per cent lower than a civilian who started service at the same time at an equivalent grade. To provide an equated pension to a fauji, the pension payout ratio has to be at least 75 per cent, as it was till the Third Pay Commission slashed it to 50 per cent.

The other options to safeguard the “edge” are to increase the salary scales of faujis significantly above civilian pay or to proliferate the number of senior positions — as it happens for civilians — to safeguard promotion prospects and income. Neither is an optimal solution to deliver more bang for the buck. Both require complex negotiations between losers and gainers within the armed forces.

The fact remains that OROP, as a principle, is flawed. It is not consistent with the principle of efficiency and it violates the principle of contracts. Pension is a stream of future payment for past services. Pay is a dynamic concept which changes as markets and job requirements change. Pay must reflect current market conditions. Pension is like a fixed annuity, albeit indexed to inflation to protect pensioners. Increasing the base pension amount as pay increases, as envisaged in OROP, is indefensible.

What then is the way out of the Jantar Mantar logjam, where the agitating faujis vent their gussa?

Good practice suggests that huge changes in pay be avoided since they lead to intergenerational inequity — future employees get paid much more, even in inflation indexed terms, for doing the same job. But such pay changes are sometimes necessary to correct a long neglected problem. Interim solutions can be one way to smoothen the transition. This is the way to go.

The government can restore the pre-1973 pension payout of 75 per cent but only for those faujis who retired between 1973 and 1995 when pension was not 100 per cent inflation indexed. This will significantly soothe the gussa of faujis whilst creating no untoward precedents for civilians.

The cost is around Rs 10,000 crore per year (back of the envelope estimates) or 7 per cent of the annual defence revenue budget for a period of four years.

Righting a wrong is costly but best done whilst the cost is bearable. Giving fauji pensioners short-shrift, whilst feting them publicly is inconsistent. Let January 26, 2016 be when the President of India soothes the gussa of 1.6 million fauji veterans.

Adapted from the authors article in Asian Age August 23, 2015:


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The defining feature of India today is bottled up, seething anger. It erupts unexpectedly anywhere — in the plush drawing rooms of the rich, on our choked roads, in crowded, middle-class colonies over parking rights or in the ramshackle dwellings of the poor, over imagined insults and petty money disputes.

Saeed Akhtar Mirza’s 1981 celebrated film — Albert Pinto Ko Gussa Kyoon Aata Hai (What makes Albert Pinto angry?) starring the blessedly talented Naseerudin Shah, explores the roots of societal anger. It concludes that, contrary to modern liberal belief, it is difficult for individuals to go from zero to hero overnight. Society functions best when individual expectations align with the pace of social change.

Political pundits have forever advised politicians not to raise expectations too far beyond what can be realised or delivered, precisely to avoid such a backlash of sullen resentment or angry outrage. Yet, this has never stopped politicians from continuing to make rash promises.

Contrast this with the behaviour of bureaucrats, who are usually conservative with promises and targets. This could be because they have little to gain from aiming high. With no upside, why take a risk? Is risk aversion holding governor Raghuram Rajan of the Reserve Bank of India from lowering interest rates and thereby risking inflation? This could be one, albeit implausible, explanation.

Alternatively, maybe, the RBI governor and his team have watched Albert Pinto… carefully and remember that nothing can be worse than creating expectations and not meeting them. This government was voted in on the plank of restoring fiscal stability and providing jobs. Inflation can totally disrupt both objectives.

The political problem, of course, is the 10 million young people, who join the workforce every year. They voted the government into power and are now looking for the jobs they were promised. Telling them now that they lack a job because they lack skills, is a Kafkaesque googly that could result in a Pinto-type outburst on a massive scale. Hence the political pressure to kick start growth.

But what is the surety that lowering interest rates alone will result in more jobs. The world is finally flat — at least in terms of prospects for economic growth. In this dull market, with large inventories and surplus manufacturing capacity, new manufacturing jobs can only be created by ramping up protection for domestic industries. This option, as anyone who has driven an Ambassador car will know, has disastrous long-term consequences for productivity and competitiveness.

A better option to increase the competitiveness of Indian exports and provide protection to domestic manufacturing, would be to depreciate the INR as China and other competitors have done. But here again the ghost of potential inflation lurks via higher landed cost for petroleum and edible oil. The possible flight of foreign capital threatens the stock market and the external account. The higher cost of servicing the foreign debt of businesses is also a downer.

In any event whilst the macro-economic variables are tweaked, direct, rapidly deployed interventions for growth and employment are needed to meet expectations. Three “win-win” options stand out which are reasonably non-inflationary; targeted at jobs and quickly implementable.

First, get a grip on administrative reform and focus on tangible outputs and outcomes. The determination to get the Goods and Services Tax (GST) implemented by April 1, 2016 shows the way, as does the focus on ramping up highways construction and making Indian Railways more efficient.

Second, the steps being taken to increase domestic coal production via the transparent allocation of mines and gas production via price incentives for exploration in difficult fields, are necessary foundational work, albeit with medium term benefits.

More immediately, the Union government needs to restructure the accumulated loss of Rs 2 lakh crores of the electricity distribution utilities, as was done previously-albeit at a much smaller scale- in 2001. This is the only way to reactivate the demand side and realise the downstream benefits of enjoying, for the first time, an idling surplus generation capacity. But the 24×7 “electricity for all” mission can only be sustainable if it is linked to reasonable cost recovery for the utility and the complete stoppage of theft. This is one subsidy hole which is completely avoidable.

Third, an interim option to whip up “employment”, in these troubled times, is to offer a two-year National Service Mission for all young citizens of ages 19 to 25. One million young adults, each paid a stipend of Rs 6,000 per month by the government, could be offered this opportunity with a relatively nominal annual outlay of Rs 14,000 crore. For the young, this interim employment could be a “holding plan” while they look for a job. For the government, it buys time to create the environment for incremental private employment.

To weed out the rich, the poorly motivated and the faint-hearted, these young men and women would need to work in the 6,000 rural development blocks which dot the country and acquire skills on-the-job, in forestry, agriculture, irrigation, civil engineering, policing, security, public health, sanitation and education. They would function as management trainees and be placed according to their aptitude, education and skills. Trainee doctors are already required to do such service.

If the scheme were to be presented as just an opportunity for the unemployed and the poor to earn some money, it would end up being a less useful replica of its cousin, the Mahatma Gandhi National Rural Employment Guarantee Act. To brand the mission appropriately, it must attract the educated young across the social and economic spectrum.

To profile it as an option for high achievers it should be made compulsory for all aspirants to public office — budding politicians, potential judges and future civil servants — to start by experiencing life at the bottom of the public service ladder even before they fight an election or take the entrance exams.

Considerable social benefits are possible by bringing together the young from disparate groups in a competitive environment over extended periods. The resulting cohort networks of “desh sevaks” would be unique. Unlike educational or social networks these would cut across class, regional and religious rigidities and narrow the gap between “people like us” and “others”.

The first step in anger management is to feel equally responsible for the situation one is caught in. Albert Pinto and his ilk might have been less disillusioned and less angry had they had the chance to be a “desh sevak”.

Adapted from the authors article in the Asian Age August 13, 2015:


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Who can say it better than Amitav Ghosh, the celebrated author of the Ibis trilogy, the master of evocative words and beguiling stories, when it comes to documenting the life of migrating Indians.

Bihar, Uttar Pradesh and Bengal (including Bangladesh) continue to supply cheap labour to the rest of India today, just as they did in colonial times to British plantations in Guyana, Fiji and Mauritius. Does domestic migration serve public interest beyond the individual benefits it provides?

The merger of cultures

Let’s consider what happens when stereotypes migrate and coverge physically. A single Tamil child of young, upwardly mobile, working parents in Chennai; reared by a Bengali nanny; driven around by a Bihari driver; taught by a Maharashtrian; living in a house built by masons and carpenters from UP who eats wheat grown in Punjab, cannot but be truly Indian.

Into the consciousness of that child are woven, the stories and hopes of the rest of India. It is unlikely, therefore, that she would be content with just her Tamil identity. Of course the danger is that she could become the domestic equivalent of the ABCD (American Born Confused Desi). But any change has to start by perturbing the status quo.

Strict “isolationists” would of course bemoan the demise of “pure” Tamil culture. They will quail at “bhel-puri” coupons being tacked onto tickets for a Bharatnatyam recital or retreat in horror from Bhangra rap at a jana vasam- south Indian baraat. But cultural cross-overs are the stuff that nations are built upon.

A national identity

The national identity project is not new. But in recent times it has been undermined by politicians who benefit from nurturing regional, cultural and religious silos rather than working actively to dilute them. This trend is now pretty much irreversible.

But the hope is that with economic development, traditional identities-caste, religious or regional- will lose the urgency and prominence they have today. This happened before when the gains from more modern identities outweighed the limited and circumscribed benefits from traditional roles. Economic migration is a powerful lever for achieving this goal.

Migration- a great Indian tradition

Indian teachers, soldiers and merchants were willing to brave the “polluting” effect of crossing the seas even in the 19th century, so long as the professional prospects (think the legendary mathematician Ramanujam), the pay (Indian shippies), or the profit (Gujrati traders) provided sufficient incentive. The cost of “ritual purification” on their re-entry into India was trifling and the priests inventive and ever willing to oblige for a small fee. This practice of embracing multiple identities simultaneously, is the essence of any developed, open-access country. We need to go back to the future and against the stifling silos reinforced on us by colonialism.

30% of resident Indians do not live and work where they were born (2001 census). More Indians are born in the Northern and Eastern states than are the jobs available in such states. Given this asymmetry between population distribution and the availability of jobs, at least one half of the 10 million youngsters who come of age every year, will need to migrate for employment mostly to the western, southern, richer northern states and further abroad.

Prime Minister Modi’s persistent wooing of the Indian diaspora can be seen from this perspective. Assuming responsibility for their woes (visas, quasi-citizenship rights, immigration hassles) is a master stroke to play to the sentiments of their families and friends in India. Why not extend the same strategy to the labour surplus states?

Soacialising the migrant

There are no facilities today to socialize domestic migrants into the environment where they go. The assumption is that they would be socialized by friends or their employers. A more blithe assumption is that being Indians they don’t need socialization. Nothing could be further than the truth.

Ghettos-ethnic, religious or regional are a fact of urban life. These are insulated and largely self-regulated. They perpetuate traditional identities rather than facilitate the development of new ones. If domestic migration has positive externalities- like helping develop a national identity or making labour markets more liquid- it is time we financed this public good. In a poorly targeted way we do so already by keeping railway fares much below the cost. Why not target support better to these brave hearts?

The time is right to launch this public program aimed at documenting, understanding and alleviating the challenges of domestic migrations. Marketed correctly, this could be of huge interest in Bihar and Uttar Pradesh- two large states which go to the polls within the next two years.

There are two key, low hanging fruit to be harvested:

First, provide a digital friend (e-saathi) to the migrant. Migratory workers should be able to access a National Travel Support Service (NTS). This could be a toll-free number they can call nationally and seek advice from a digital friend on travel, accommodation, labour markets, wage rates and emergency response.

The NTA could be administered by the Ministry of Labour and Employment since a large part of its work, albeit not exclusively, would be across state government borders. Ideally, management would be outsourced to a non-state or private agent. Over time it would become networked with local NGOs who work with migrant labour and provide a basic social safety net.

The political attractiveness is obvious, not least because it is a pro-labour step. It would be most helpful for migrants in the informal sector, like in construction. It could extend a welcome helping hand, directly to one fourth of Indians who migrate, including for work.

Second, a safe, transit home for poor migrants. Domestic migration is often also a consequence of social persecution of marginal communities at home. Trail blazers, who marry inter-religion or inter-caste are forced to leave. For the poorest migrants, the biggest problem is finding a safe shelter till they can get a job and move on. For NGOs who want to help this segment, the problem is finding the land to provide a shelter at a location where work can be found nearby.

In the past, the Rail Yatri Niwas was a boon to the travelling middle class. These provided reasonably priced accommodation close to the railway station. Since then private hospitality facilities have exploded for this segment of travelers. It is time now to shift to serve the poor by leasing small land segments out to NGOs who wish to manage the socialization of poor, urban migrants. This intervention in the “real sector” will give a face and teeth to the virtual friend.

Cynics will dismiss this proposal as yet another mirage created by the smoke and mirrors of digital India. Other critics will rile that it is just another election gimmick. But pause and consider that the most practical public interventions are those which align with political economy and use the available entry points to enhance the public interest. This is one such win-win example. The families of poor migrants are unlikely to forget who helped to keep their migratory kith and kin safe, whilst simultaneously serving the public interest of social protection for the poorest.

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