governance, political economy, institutional development and economic regulation

Archive for August, 2013

Aside

Politics and theater

Parliament disgraced it self yet again. The statement of the PM on the economic situation was a welcome window into the minds of the policracy. Perhaps it is the Shatrughan or Babbar effect, but may of the honorable members believe that they magnify their own self image by copying a fiery, rightious Bachan, a braggart Sanjay Dutt or a stylishly, thughish Pran, If we wantd to see imitation actors we would watch movies instead. Pity none of them can dance though. It would have been good to see Manmohan deliver his economic sermon break dancing to a Hritesh number. The nearest any member comes to this is the redoubtable Rajiv Shukla who vitrually goes into an attarctive “wave” dance the minute the opposition shouts at the PM.

It was not clear what the government wanted to achieve yesterday. Statements made in the house are assurances of delivery (promises) which are monitored. No new promises were announced by the PM. He merely repeated what Chidambaram had already assured the house. Worse the manner in which he read the speech out had less credibility than the assured delivery style of the practised lawyer, Chidamram. The opposition oddly thought it necessary to shout down a “maun” PM. Possibly they have become so used to not hearing him at all, that that the merest squeak out of him is tantamount to an aggressive barrage.

Yes unbridled corruption is a mjor failing of the present government but that is the election plank of the Aam Admi party which is invisible in Parliament. Only those in power can be corrupt. The UPA is in. The BJP is out, so we can’t compare apples and oranges. Corrupt sons and sons in law are not a chink of the Congress alone.

I wish the opposition had cornered the PM on the three key constraints to unlocking growth and good governance. One is the recent sense of “entitlement” of the “policracy” to massive corruption. The potential and many would say the impunity, to be corrupt, erodes the possibility of shrinking Delhi in economic decision making and the transfer functions and finance to the States. On corruption it is only the record of the left parties which is relatively clean but unfortunately, unlike their brethern in China, they join the populist bandwagon here and shed crocodile tears for the poor, with little regard for the disastrous economic outcomes of populism. In fact the left is very much like our PM….honest but ineffective and the new India does not endorse that.

 Second, we need to correct  the extravagant spending on defence of around 20% of the budget. This is a major drag which comparative developing countries in East Asia (excluding China), Latin America and Africa do not face. Since the defence sector is notoriously non transparent, little is know of how much public finance leaks…..but the growing political clout of arms dealers makes it apparent that it is they, who are king makers and not the other way around.
 Third, the dynamic economic record of some state level leaders (Modi, Nitish, Patnaik etc) has a major medium term constraint. ALL of them follow the centralised Delhi model of not devolving functions and finance downwards,  to where the real action is, at the local level. That is the third quiet revolution still to happen in India but is completely ignored by all parties.
India does not lack economic or technical expertise in the public sector, skilled labour or private entrpreneurship. What we lack is a honest, formally endorsed leader at the national level. The best cooperatives, like Amul, grow because of honest, pragmatic and enigmatic leaders, like Kurien. If INFOSYS today needs to recall Murhty, to rescue it, shouldn’t India also reach back in time and get an oldie (albeit preferably, one without a child-in-waiting), who has the experience, the rectitude and the fire in the belly to lead? India is a young country but sometimes, it is only the exprienced who can deliver what the young want.

Overhauling political institutions

The Aam Aurat finds it difficult to understand what the “policracy” does, though all agree that it is important for their welfare. Most believe that their local representatives (municipal corporators, MLA and MPs) have access vast amounts of disretionary public funds and access to “people who matter” who could get them a government job, get their children into school, get the police off their backs, restore the water and electricity supply, clean the drains or reduce the price of cereals, sugar and vegetables. Politicians collaborate to give the impression that they can all this and more. If they were to actually tell the truth, that none of this is their job and they are supposed to just legislate for the future, no one woud even offer them a glass of water let alone genefluct outside their homes.

The blame lies in our curious political architecture which is copied from the UK; a complex system based on tradition and organic growth which does not even have a Constitution. Ideal for catering to a small island of less than 30 million people. Extrapolated to a poor, illiterate, continent sized, heterogenous country like India, it is no surprise it fails.

The American system of electing a President to head the executive and a Senate/House of Representatives to legislate is far cleaner and simpler to understand. The UK system rests on the fundamental assumption that the PM shall be the leader of the dominant party in parliament. The reason is that unity of command is essential at that level. Imagine a situation where the PM has to press the Nuclear button. By habit and training, the PM needs to have the confidence to take that decision. If she first needs to get the clearance of the party boss, it may be curtains for all of us. In India the recent separation of formal and informal political power, with the first vesting in the PM/CM but the latter vesting in the party boss, violates this precondition for UK style democracy.

Second, it is bad enough that parties now go to the polls without declaring who their PM/CM candidate is. On top of that, there is hardly an ideological difference across parties to choose from (except the left parties) with parties increasingly relying on caste arithmetic rather than election manifestos to get votes.

Third, the rise of regional parties has fragmented the national vote resulting in the coalition “dharma”. By its very character a coalition is subject to greater tension again because there is a fragmentation of command and control. Coalition partners don’t sink or swim together. They can coalesce into a different grouping if the present one does not suit them.  Whilst this flexibility is clearly good for democratization of the government, since it makes it more responsive to sectional interests, it is terrible for governance standards. It extends the time required for taking decisions. It exposes the government to continuous bargaining and presents it with zero sum situations where the future of the government may depend on turning a blind eye to fraud and corruption by a partner, just to keep the government going.

In contrast the Presidential system has none of these limitations. The person who is elected President clearly has the mandate of a majority of the electorate. The “inclusivness of representation” requirements can be made more stringent by requiring the winning candidate to have in addition to an aggregate majority, a minimum proprtion of votes (say 30%) in each State (or in each MP constitutency at a lower level of 15%), with subsequent run offs till a candidate reaches the required threshhold.

The Presidential system assures a stable executive and a stable legislature for five years. The government needs to go to Parliament only for sanctioning the annual budget, new legislation and endorsement of international agreements. Other than these, the executive becomes free to implement its program without the daily threat of the government falling because of a lack of majority in Parliament. This would also allow the judiciary to carry on with its main task of implementing the rule of law, rather than becoming the default executive it has become today. When the aam aurat votes for the President she will know that it is this person who she needs to look to for a better life. She is likely to be be more careful in her choice since there would be a direct link between her vote and her welfare. Today she votews for party symbols ( a hand, a chair, a cycle) with no way of knowing what the symbol stands for.

More imprtantly, the President would be able to choose her political executive team from the best professionals in the field and not be  restricted to those who were able to find their way into Parliament, as is required today, though the choice would need the endorsement of Parliament. Imagine getting Metro Shreedharan as the Railway Minister; L&T Naik as the Industries Minister; Bindeshwari Pathak as the water and sanitation Minister or Narayan Muthy as the IT minister. Professionals from all fields would have an opportunity for public service, without getting imbroiled in the underworld of electoral politics.

The five point measure of good governance is (1) legitimacy (2) professionalism (3) responsiveness and (4) powers matching  responsibilities.

Governments under the UK model in India fail this test. (1) They are not legitimate since they come into power with a bare 25% of the vote share. (2) Since the pool from which the political executive is drawn is restricted to those who get elected to Parliament, professionalism is at a discount. (3) These governments are responsive only to their own vote bank, not to the nation. (4) Lastly due to the trend of separation of formal and informal power, with the balance shifting to political parties from the executive head, such government are not sufficiently empowered.

Legitimacy derives from the voter knowing the person she votes for and what the person is expected to do for her. Professionalism needs to be recharged by touching base periodically with the real world away from the ivory tower of public policy. It requires the ability to walk away from political power and do other things. Responsiveness is a function of incentives. If i owe my job to the party and not to the electorate, then i will serve the party, not the nation. As for responsibility with power even a junior bureaucrat will tell u that this is the key reason why the State is indecisive and directionless.

66 years on India has evolved into a confident country bound together, not by the impersonal constraints of Sardar Patels “steel frame” but by the recognition that there is “value” in sticking togther from Kashmir to Kanyakumari. “Paise vasuul” is our common aspiration. Hinglish is our linguafranca, though we may still think in our own regional language. The differences seem smaller and the similarities much larger. We are held togther not by force, but by choice. The demons of 1947 (religion, caste and economic rigidities) are regressing. Literacy is on the rise, as is economic empowerement. Can we please get an institutional overhaul of the political architecture which could realise this potential?

 

Aside

India is not an international Tendulkar

Indians are like Americans. Neither are overly concerned by foreign policy. The depth and range of their continental nations is enough to absorb a the limted time span that is available to a citizen, beyond the every day travails of living; do we have enough water inthe tank or is the invertor working?(India) is the babysitter going to be on time today (US); is the car due for servicing (India) Is the car due for selling (US); are we running out of cooking gas (India) do we have enough food in the refrigerator (US); how many bills are unpaid (common) and finally can we afford onions today (only India)?

It is odd therefore that the Indian government spends so much time and energy on foreign affairs. It is never clear what India gains specifically from maintaining a presence at 125 overseas missions and intensive, loud, always vociferous but rarely credible, participation in all international fora. The annual budget of the Ministry of External Affairs (Rs 11,700 crores) is larger than atleast sixteen other major ministries including the Ministries of Power; Atomic Energy; Science and Technology; Environment and Forests; Land Resources; Urban Development.  It is strange that waving the flag overseas should matter so much when there are compelling competing domestic priorities uncared for like covering manholes, improving public transport, providing clean water and toilets for 60% of our citizens .

For starters why not merge the Commerce ministry, the aid sections of the Departmentof Economic Affairs and the climate change division of the Ministry of Environment with external affairs since all these involve dealing almost excusively with external actors. There are obvious synergies in consolidating such functions and hopefully significant savings too. What about cutting down the number and strength of our overseas missions, particulatly those in developed countries, where we are inconsequential, beyond being a visa office and reallocating staff where they matter (but don’t enjoy first world comforts) like in Africa and Asia.

More significantly why does India always bat above its height in international affairs when it is not an international Tendulkar. This tendency to loom large externally, without pulling one’s weight domestically, reeks of grand standing. I wonder if it fools anyone abroad. India is an economic midget; a lower middle income country (with a per capita GDP even lower than the average for all Sub Saharan African Countries) with a long history of underachievement and below potential performance. Surely there must be merit in adopting a self-interested stance, focusing on what directly benefits us, keeping our heads above water ut below the radar and let the big boys (the US, China, EU, Japan, Russia) look after the World, It is in our interest to be non-threatening and focused on enlarging our economic pie without enlarging our international political weight.

For all our “international political presence”, Indians require visas to enter more countries that most other nationalities. This is because too many of us are desperate to get away to the developed World by hook or by crook; away from poverty,  exclusion and diminishing economic opportunity. The vast majority of Indians abroad are migrant labor. These are the people our missions are meant to represent. I wonder how many Ambassadors and Consular Staff would be happy, or have the training, to play the role of a “nanny” a “social protection” role;  canvassing for the rights of these needy Indians in a low key manner, managing their grievances, descending to their level to provide them access. The task our overseas representatives get profiled for are international protocals, meeting with high dignatries and facilitating large business deals. Are our Ambassadors only brokers of rich India or do they have the more onerous and less glamorous responsibility to protect all Indians overseas? I don’t for a minute doubt that the Foreign Service can excel at the “social protection” aspect of their work. The problem is which direction do the incentives of their job drive them?

India is too fragile economically to rub shoulders with the US, China or even Russia. We are not South Asia’s “big brother”. We may be numerous and big in size but we are poor and badly organised.  Nations are not Sumo wrestlers any more. It is the mocktail of diplomatic agility, economic nimbleness, internal political and social accord, wealth sharing, opportunties for a citizen to grow through international partnerships which makes a Nation strong. All these point at tacking domestic concerns before we burn money overseas.

The performance measure for a reformed and consolidated external affairs ministry should not be getting India the veto power in the UN Security Council. It should rather be to achieve a surplus CAD by pushing exports and foreign investment and the establishment of a network of trade based international security partnerships, which allows us a 5% reduction in the defence budget every year till we reach  a share of 5 to 10% of our annual budget. Currently it is a high 20%. We are too poor to afford that. The model should be Malaysia not Singapore, the US, Russia or Pakistan…big military spenders all.

Hello government calling

Helping the poor is a complex  balancing act between tolerating the fiscal cost of leakages to ineligible persons and the social cost of a perception of inequity because of unfair exclusion of eligible persons. A similar amount as dole for all poor households (the new politically correct term for a “cash transfer”) irrespective of their distance from the poverty level, creates the piquant situation of making the last eligible household at the line of poverty, richer with the dole, them the next (but ineligible) household  just above the poverty line. A tapering cash transfer amount (similar to the inverse of the Income Tax regime, where the cumulative tax proprtion keeps increasing, as income increases, but the next above person does not loose out on the nominal benefit of the person below) is one way out of this trap, but it is complex and expensive to assess and administer. In practise this would require computation of the annual income of each the 70 million poor households; an onerous task which would cost too much relative to the meager amounts the government can afford to pass on to the poor.

The other option for “targeting” the poor, is to subsidise “inferior goods” which the rich  would never use. The downside is that this requires the creation of an artificial market for “inferior goods” dependent on government subsidy (rarely an efficient option) and the adverse social stigma that such goods attract. The definition of “inferior goods” also changes. The Mahatma made Khadi ultra chic. Coarse grains, once the food of the poor, are today the “healthy” food of choice of the elite, while the poor eat white bread.  Also the range of such goods is too limited for extensive use as “cash support/subsidy” mechanism. A varient is the “food for work” programs which automatically restricts employment and hence income, to those who are willing to do manual labour. Ofcourse, these are not suitable for the poor who are aged, sick or are kids.

The third option is to subsidise socially beneficial actions by providing a financial incentive to a family for getting girls educated, kids vaccinated in time, regular pre natal care to mothers and medically supervised delivery, but all this only if they access “inferior institutions” like government schools and health clinics, which are not the service providers of choice of the rich. 

Irrespective of the subsidy/cash transfer model used, a common element is the capacity to monitor and evaluate the impact of the intervention on atleast an annual basis. Unfortunately we do not monitor development outcomes as closely as we monitor inputs (the number of kids vaccinated, number of  mothers provided pre-natal care etc). Had outcomes like disease prevelance levels and maternal and child health indictors been monitored closely, we would not have 40% of Indian kids who are malnourished. This illustrates the need to improve program implementation.

The fulcrum of program implementation in India is the 660 districts manned by officials of the state governments and led by the “steel frame” (IAS, IPS, Indian Forest Service) which have a notional, dual allegiance to the Union government and the states . This administrative structure continues despite the 1992 constitutional provisions for decentralising powers and finance to elected leaders at the local level because the state governments are loath to transfer powers downwards to local political leaders; a replica of how the Union government behaves with the states. This stalemate ensures that the District Commissioner/Magistrate (an institution handed down by the British) is key to making or marring a development program. The average District Magistrate has a multidisciplinary team of between 50 to 100 qualified officials representing all the departments and ministries working with her. She is the “district level” version of the Governor of the state, an unelected official with significant administrative powers. 

At the district level, there is hardly any real time information available on the outcomes of a program. Information becomes available, with a lag, of two to three years. District Magistrates and their colleagues, visit villages in their districts during the winter season to review development programs and the status of the rule of law. An updated dashboard of socio-economic indicators of the village they are visiting, is rarely available to them, for making a rigorous evaluation on the spot. Instead, officers rely on anecdotal evidence, which varies, according to how it was obtained and how well it is triangulated. It doesn’t have to be this way.  

Poverty data, based on assessments of household consumption, is collected on a five year rotation, but an annual rapid survey of household consumption is possible using internet enabled tablets, connected through the telecom network, to a central server. This can make real time data available at fairly reasonable costs. Once everyone has an Aadhar card and can be uniquely identified it will be relatively easy to monitor the economic status of the poor. The poor frequently migrate, within the country, for jobs. Till now migration resulted in duplication, misue or the emigrant dropping out of the social protection system. With the UID, migrants can be identified anywhere which makes  Aadhar a major technological breakthrough for identifying and benefiting the poor. 

India is perceived worlwide as an IT superpower. Indians abroad are routinely approached by non Indian friends to fix an IT problem, on the mistaken perception that all Indians are Math geeks and IT experts!! The reality back home is unfortunately very different. Undoubtedly e-governance (the manner in which citizens interact with government to get public services) has changed dramatically since the time the electronic railway reservation system was launched in the 1980s. The achievemnets however are still way below potential.

The government still doesn’t use  telecom technology and social media for assessing the impact of its programs despite ample international evidence that handheld computers and social media apps are invaluable realtime guides for program implementors. CB Naidu as CM Karnataka (1995-2004) used to review all his districts every morning using Video Conferencing. 10 years later, VC is now a clunky tool; good for conferencing but inefficient for gathering real time data which is best done through a smart phone or tablet. The government meanwhile is still entangled in paper based systems. The missing coal scam files illustrates this antiquated oddity.  Going electronic is an indivisible concept. It cannot be done efficienctly in a piece meal manner. The entire chain of command, from the President of India through the Prime Minister to the village level worker needs to be able to access the same electronic platform for strictly regulated and supervised official use and interaction. Only then will we be able to turn the page to the 21st century. The fight against poverty must be SMART (Specific, Measurable, Attributable, Results oriented and Timebound) if it is to succeed.

 

The secret of the price of onions

Can democracy and public secrecy go together. It does in the USA, as Julian established and so i suppose we are doomed to accept it in India too. This is despite the much championed RTI…..a legislation which is as hollow as a bansuri (flute) but sounds as sweet. The government is effectively answerable only to 2.5 % of the population (30 million). 50% of Indians are kids; 5% are too old to care and 40% are illiterate, leaving only the residual 5% who are eager for and could use, more information. Of these, one half, or 30 million have “adjusted” in the time honoured Indian way of “jugaad” (innovative making do) to the mantle of public secrecy and indeed use it to their advantage to arbitrage on “inside” information; bankers; money, stock and merchandise traders; lawyers; industrialists, media warrier, lobbyists, cereal farmers and ofcourse the ever expanding “policracy” (some of whom may well be illiterate).  

The “policracy” earlier used “licensing” to enrich thenselves. Today they use “inside information”. Which stock is likely to go up or down because the government decides to favour or frown on an industry through the numerous, mysterious instruments still available to it; the exchange rate of the INR, the volume of government borrowing, interest rates, exim tariffs, tax changes, public finance led real estate development (fondly promoted by the urbanization economics led growth groupies)….the list is endless.

Where does that leave the average professional, small businessman and progressive cash crop farmer, which comprise the remaining 2.5% of India? These are the middle class who live in congested, urban, ghettos in matchbox homes or degraded, rural, market towns striving to get their kids educated (possibly abroad) by keeping their nose to the grindwheel and ploughing away in their fields, their mom and pop stores or their dingy offices. Pretty much nowhere. Their job is to pay their taxes (some direct but mostly indirect), obey the law, keep out of trouble and cultivate the powerful as an insurance measure against a health emergency (u need to “know” a doctor); a court case to evict a troublesome tenant (u need to “know” a lawyer), an accident (u need to “know” a top cop and have a friend in the insurance company), send money to your daughter in the US or get her passport extended (u need a friend in the Foresign Service)…the list is endless. It is not for nothing that “Kaun baega crorepati” has a lifeline “call a friend”.

What does the middle class think of the latest “media” horror….the slide of the rupee? Many who get remittances from family overseas are delighted..atlast the labors of their daughters, sons, mothers and fathers  overseas are being valued correctly at market rates. Exporters are overjoyed and are buying  more Bentleys in the expectation of an $ to INR to value of 70. Those who sold their cars and mobikes and switched to the metro in Delhi also have the last laugh and their travails of excessive jostling and the unruly and counter productive rush to get in and get out simultaneously (a throw back to the days of scarcity), is almost bearable. New home owners are eagerly looking forward to lower interest rates. Domestic industry with a low import content (cement, infrastructure, metals, is overjoyed with the prospect of low interest led growth). Telecom profits will rise as telecommuting becomes cheaper than an air or land trip. Indian makers of Ganesh murtis, lamps and fittings can now compete with cheap Chinese imports. 

Who is troubled then by the INR slide. It is only the government for whom it is a problem. The petroleum import bill will increase; the cost of subsidies will increase; cash for the leaky “food security” bill will be even tighter, inflation may rear its ugly head unless the  supply side can be energised which the government seems incapable of doing, frozen as it is neanderthal silence. There will be no instant stock market revival as foreign hot money will leave in droves and foreign investment (much of it round tripped by rich Indians) will become more expensive and hence scarce. Foreign holidays in Spain and Phuket will become more expensive as will overseas shopping. All these are no-nos for the “policracy and policracy arbitragers” comprising 2.5% of India. However noone notices that another 2.5% of Indians are smiling.  The remaining 45% neither understand all this nor do they care. For them the price of onions is what matters.,,,and todays papers report the BJP is to blame for that.   

Say no to the rule of the old

India looks its age at 66. Tired, despondent, shambolic, spiritless. Odd for a country where 50% of its population is below 15 and another 40% below 54 years of age. Part of the explanation is we die young of malnutrition, poor health care and (believe it or not snake bite) but the main reason is a curious adherence to “seniority linked to the date one starts political work…very much like babus”. For fresher MPs those who are already in Parliament are “seniors” not colleagues as though Parliament were a continuation of Doon School, which u enter on the strength of your parents money and leave when u find more interesting things to occupy yourself or when u are called to a “higher” service.

India needs to get out of this mode of grandparents looking after it. We need parents in charge, in the age group 40 to 60; skilled, professional and energetic  men and women. Why is it so difficult to amend the constitution and prescribe maximum age limits for ministers in the same manner as they are prescribed for bureaucrats? Post 60 one is a liability to everyone so why thrust yourself on a nation? After all if a bureaucrat is not efficient after 60, will not an executive politician attract the same disabilities? Why not make a distinction between MPs and Ministers with the former coming in at any age but the latter drawn from the pool of MPs of eligible age. The two sets of politicos do different jobs. MPs use their wisdom, experience and direct link with the people (Lok Sabha) or the states (Rajya Sabha) to represent their best interests through legislation. Ministers on the other hand, take executive decisions and manage a huge organisation very much like a CEO of a listed large company. 

India has changed rapidly over the last six decades; in the 1970s M.S. Swaminathan’s Green revolution transformed agriculture; gave an economic fillip to farmers and empowered backward land owning castes; positive discrimination (reservations) in education, government jobs and Parliament for scheduled castes and tribes (and post 1990 for backward castes via Mandal) churned Indian society further; economic liberalisation post 1985 created a generation of new entrepreneurs and professionals and broke through the last vestiges of the “koi hai” colonial club of anglicised Indian businessmen and Marwari industrialists and traders. This social transformation is not reflected in our Ministers.

In business, old age is not a qualification. Narayan Murthy led the way by retiring at 65 (though he is now back at INFOSYS as a grandparent caring for its bottom line). Rattan Tata retired belatedly at 75. Lets start forcing politicos to similarly retire..choose any age but lets say no to old age in power.

Invite the Dragon in

Indian trade diplomacy has an alarming tendency to score a self goal. Our approach to China is like that of a chimpanzee thumping its chest to imitate a gorilla. It is delusionary for India to think it can compete with China in what it is already an expert: the supply of manufacturers at affordable prices. China is unabashedly expansionist and we need to recognise that. The only way we can deal with that is by letting them exploit the Indian market in a graduated manner, rather than put up trade barriers against China as our Industry leaders would want us to do (there is a government committee apparently trying to establish that Chinese turbines supplied to India for powr generation are substandard).

Here is a counter strategy. Collaborate with China. In fact we hve no option if we are not to end up being a pawn, a “card” that the West uses to contain China. Do we really want to be in the same space as Pakistan? We live in a tough neighbourhood and it is always best to keep talking with our neighbours;  Bangladesh, Pakistan and Nepal but it is unlikely that any of these are near term prospects for shared tarde and investment led growth for India. In any case all of them already frolick in the Dragon’s lair and we don’t have the deep pockets to seduce them. Lets stop tring to use nepal as a pocket borough and encourage it become a neutral “Switzerland” instead, a conduit for overland trade. We are far too similar in South Asia and too politically volatile for generating growth from within the region. 
 
China has none of our problems of cultural heterogeneity and religious fault lines. It works to a plan which gets implemented and its pockets are a larger than ours by an order of magniture. It is already building road and rail infrastructure right up to our and Nepal’s borders. We should encourage them to extend this and link it with Indian highways and the rail network. Invite the Chinese into the Indian market. Security hawks will baulk at this suggestion. But think of it. This would quadruple the market for India and increase it by one third for China. Sino-Indian overland trade, investment, tourism, exchange of students and cultural links will be facilitated. We could buy into each others growth rather than beggar each other.
 
More importantly, a Sino-India (yes in that order) collaboration would work to India’s benefit in the same way as Canada and the UK benefit from being special friends of the US. I know this analogy will not go down well because our leaders like to be larger than life and reality we have all bought into this delusion. China rolls out infrastructure at a rapid pace. Why not seek its help in developing the 100-200 “maoist” districts of India? Who better than China to deal with our indigenous Naxalites? An additional benefit could be our indigenous communists may then be induced to come out of the woods and into the current century.
 
None of this will happen, however, because South and North Block egos will never let such collaboration fructify. Our politicians are led by the nose by the heady mix of our diplomatic, military, space and nuclear energy establishment. Not surprising since high technology (coexisting with brutal poverty) is the expected lay of the land when “Rabudom” rules (an unholy alliance of Rajas, Babudom and their bonded laborers) .
 
Visionary leadership is not about thumping hollow chests. It is about putting the citizens interests before the fiefdoms and egos of the “Policracy”. We should welcome Chinese murtis of “Ganesh”; cars. computers, ACs, cement, fertilizers, food, and flowers if they are supplied cheaper than our own products. Lets learn how to do business. We have an indigenous word for it….”Baniagari” currently used as a perjorative by our educated, mostly rentier, glitterati. This is the need of hour not the waving of the tricolour. Business sustainability is about having to compete so that business interests, investments and jobs get channeled to areas of comparative advantage. If we assure China of business we can be friends and benefit from it. If we follow the path of aggressive, public finance led competition or attempt to build a counter block of political support in South Asia, we will score a self goal. Lets choose wisely.

Indian Rabudom and Baniagiri

Indian Rabudom and Baniagiri.

Indian Rabudom and Baniagiri

Is India a land of Banias or Rajas, Babus and bonded labourers (the latter collectively termed “Rabudom”)? The anglo-west is clearly a land of banias (service with a smile, anything to improve the bottom line, everyone tries to work) as is China and East Asia.  South Asia (including India) and Africa are still caught in the transition from Rabudom to “Baniagiri”. In essence the difference between the two is in the nature of capital accumulation.

Rabudom relies on an “extractive” model of depleting what already exists, like all of West Asia and much of Africa. Under Rabudom, ownership of physical resources is the key to wealth; land, real estate, mines, oil, forests, rivers, lakes, spectrum and in a unliberalised business environment, licenses to set up businesses (i call these legislated rents). Not surprising therefore that this model of wealth accumulation runs foul of the workers; the ordinary citizens who can see the use of law and muscle power to corner natural resources and “the legal right to do business” and hence resist the process. Baniagiri on the other hand is based on a more sustainable “value for money” and “going business” approach. Baniagiri considers both the input (resources) and the output(customer satisfaction) value propositions over the long term. In doing so, it focuses on the “use” of money to maximise profit. Rajadon seldom focuses on “how” money is used because more wealth is always there for the asking by just digging it out of the ground…..a parallel in agriculture is “jhoom” slash and burn cultivation where the underlying assumption is availability of sufficient land.

Baniagiri also requires the constant scanning for business entry points of “high value” accretion with low levels of competititon (like a bridge across a river or a port). These areas are too complex for Rabudom. Rabudom also fears to enter business areas which require the “transformation” of natural resources into value, like using bauxite to make Aluminum or using coal, rivers or solar radiation to generate power. These are natural preserves of Baniagiri. Baniagiri would also enter the natural resources game, if an entry point is available and the value proposition is good, but the key difference is, it does not rely solely on this method of vaue creation, unlike Rabudom.  We in India are still at the “little Raja” stage. It is illustrative that the concept of “seniority (a typical Rabudom concept) exists even amongst artists and actors.

Ofcourse given our population, there are millions of Indian farmers who are deep into Baniagiri and innovation; professionals who are international quality and traditional business communities who embody the essence of Baniagiri. Unfortunately, there are still too few of these to have a critical mass to induce significant change. It is only when the majority of our citizens start becoming Banias that we will reject waste; debunk false pride in social status and acquire the vision to deliver. This can only come from someone who has lived the talk. Maggie Thatcher brought the UK back to being what they had begun as, ” an island of shop keepers” and is still hated by many for doing so.  Who will deliver India?

Rich moms could be role models

Rich moms could be role models.

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