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Archive for the ‘BJP’ Category

BJP’s new script – defending the losers

Modi grim

Thus far, the BJP has played to a core script of development; a more effective State and muscular nationalism, fanned by Hindu revivalism and an assertive foreign policy stance. This has resulted in a “tick all the boxes” type strategy, with the central focus being on winning elections. This strategy has paid rich dividends politically.
But some of the steam appears to be leaking out of this construct.

Admittedly, more Indians still put their faith in the BJP than in any other party – not least because of its charismatic Prime Minister – Narendra Modi. But voters are notoriously fickle. A politician is only as good as the last bag of goodies delivered to supporters. The BJP needs a strategy to generate goodwill in a more sustainable manner.

One option is to systematically address the concerns of those who have fallen through the cracks of the neo-liberal, open economy model we have followed since the 1990s. Of course, in doing so, the BJP will have to distinguish itself from populism and vote buying, which is the hall mark of a failed politician. Here are some options.

Protect children from malnutrition


First, we have smashed the pre-1980s growth, glass ceiling of 4 per cent per year, also called the “Hindu rate of growth”. Sustained growth reduced poverty to around 20 per cent with an additional 20 per cent teetering on the edge of the abyss of poverty. But it is shocking that 40% of children remain malnourished and not all of them are poor.

Unless a child is adequately nourished in the first eight years, there is a high likelihood of permanent damage to its brain. Clean air (to increase lung capacity), clean water (to avoid diarrhea) and micronutrient rich food can guard against stunting. Unless this is done, we are continually handicapping around 90 million kids or 7 percent of our population, from childhood.

Spending today, on these three inputs – clean air, clean water and nutritious food, is well worth the avoided economic cost of perpetually sustaining a stunted population of around 500 million. Do the math if you are not convinced. Consider also, that looking ahead, the quality of the human brain and not brawn, will determine if a nation succeeds or fails.

Social protection for the elderly- 50+ and poor

old man 2

Second, experts agree that the capacity of the average human brain to learn and innovate decreases sharply with age. Start up India, Make in India, Mudra – loans for MSMEs, all benefit those under 50 years of age, who retain the vitality to do new things. For those above 50, who have been thrown out of jobs or others who have never held a job, there is little on offer, except the back-breaking NREGA.

SKILLS India is also not a solution for them because failure rates in adult education are very high. Around 6 percent of the people above 50 years of age, or 80 million people, are poor. They could never have saved for their old age. Also, poverty is sticky and disadvantages entire families. Even their children must be barely able to keep body and soul together.

Cash benefits for this set of 80 million, at a paltry Rs 1000 per person per month would cost Rs 1 trillion per year. A progressive annual cash allocation, increasing with age, as the likelihood of doing gainful work decreases, would be sensible. This is expensive but an inevitable cost of our past public transgressions.

In addition, they must get free basic medical insurance schemes, allowing them to seek in and out-patient treatment, at any registered clinic for free, just like the middle class and rich do. This way the elderly poor will cease to be a burden on their children. The cash and other benefits for supporting the girl child have worked well. So can, a benefits scheme for the elderly poor.

Respect land ownership rights

Third, liberalization, whilst creating enormous private wealth, also generates inequalities. There are losers who fall through the cracks. Take our historic failure to provide credible commitment that acquisition would “cause no harm” to land holders. The common apprehension is that bank financed, land acquisition, incentivizes excess acquisition for speculation. It also robs the land holder of the ensuing value creation.

This creates resistance and fear. Even the latest version of the Land Acquisition Act is backward looking. It merely seeks to “compensate losers”. It should explicitly provide for “sharing of the ensuing value creation” between the land holder, the project developer and the government, using a Participative, Public, Private Partnership (PPPP) model.

land protest

India is land starved. The ownership of this valuable asset must be respected as an equity contribution to new projects, with pre-defined, time bound returns, insured by the government. Even “public purpose” must bow to the rule of law, which upholds the property rights of land-owners.

Penal sanctions for public delinquency

Lastly, some tough love is necessary to improve our public services. We should legislate – “The Public Services Act” – sanctioning those who fail to use the fiscal resources put at their disposal; we must attach criminal penalties to public actions which result in public harm, due to lack of due diligence whilst budgeting or poor implementation of projects.

death 2

If citizens die in road accidents because an ambulance cannot ferry them, in time, to hospitals; if hospitals negligently harm, not cure patients; if defective public buses, trucks, aircraft, ferries and ships are allowed to ply, resulting in deaths; if shoddy public construction causes death or disability; if an official values her time more than the life of a citizen in urgent need or if a citizen dies because the police is away on VIP duty, the delinquent officials must be held accountable. Only then can the right public service culture and moral fiber be created, so necessary, to deal with the ceaseless challenges in public life. It cannot be a one-way street with only citizens serving the State.

Also available at TOI Blogs, December 31, 2017

The two conundrums of the Modi government


The Narendra Modi government poses two conundrums for citizens. First, citizens want an effective government, like PM Modis. But they also value and actively guard their rights. Making a colonial-style government gallop, often means cutting corners and turning a blind eye to the encroachment of citizens’ rights. We are still very far from being China, where even the option to negotiate a tradeoff, between effectiveness and rights, does not exist. For PM Modi reforming the government — a long-delayed, unpleasant, plumbing task — is one way to reduce the starkness of the tradeoff as it exists today.

Harsh on corruption soft on criminality


Second, there is a yawning gap between the proactivity of government in ending corruption and the business-as-usual approach to ending criminality. For the average citizen, criminality is far more worrying than corruption. A government which does not consistently impose the rule of law uniformly loses credibility over time. The djinns unleashed by allowing hired goons to massacre Sikhs in 1984 or by allowing kar sevaks to bring down the Babri Masjid in December 1992 still haunt us.

Going up the down escalator, is hard work and wasteful

The dead weight of poor governance practices and a predilection for unorthodox solutions, to show quick results, create a drag on its otherwise creditable efforts — just like a person running up the down escalator. Switching escalators can help. But this requires a change in ideology to put growth with jobs and a crackdown on criminality first.

Growth slows

Growth has taken a hit. Fiscal 2018 will end with a probable 6.5 per cent growth and the terminal year of the Narendra Modi government — Fiscal 2019 — with seven per cent. The average growth will then be one percentage point lower than under the previous government — a point Dr Manmohan Singh repeatedly emphasises to show that this government is only about hype.

But growth is not the only metric of governance

But this is being uncharitable to the BJP government. Growth is just one of the metrics of good governance. The open economy model spits out growth but often without jobs and with growing inequality, corruption and criminality. At some point, an efficient and purposeful tradeoff can be made between higher growth and more rounded social and economic outcomes, like social protection and investing in human development. Growth has been affected because drags like the accumulated stressed assets of banks trap them into recycling credit to discredited corporate borrowers to keep the accounts “healthy”, crowding out credit to others, who could build the future. This is slowly being rectified. But the steps towards building a more responsible banking culture, to avoid reoccurrence, are not yet visible.

New beginnings in infrastructure and connectivity


Poor infrastructure and high transaction costs are another drag on growth. Higher allocations of public finance for infrastructure; doubling the rate of highway development; modernising ports and railways; tripling the number of airports connected with regular flights; promoting the free flow of goods across state borders, are positive steps to reduce the drag on growth. Allowing the overvalued rupee to realign with its real value can boost exports to meet reviving overseas demand and level the playing field for domestic producers versus seemingly cheap imports.

There is little near-term hope for private job creation

Job creation is doing worse than growth, increasing inequality, because jobs in services and manufacturing are being axed at the middle and lower end. Even in agriculture, higher productivity will depend on using machines for tasks currently done by humans, and changing regulations to allow leasing-in land for scaled-up commercial farming — again at the expense of jobs.

Reversing the trend of declining public sector employment could help. We need more specialised skills, directly linked to service delivery — nurses, doctors, teachers, engineers, accountants, tax professionals and lawyers. Better talent can be attracted by linking salary and benefits to specific positions, filled through open competition, rather than through a cadre, as they are today. The Modi government has made some lateral appointments at the highest level. But a comprehensive policy for reforming government appointments is sorely needed.

Despite the rough edges PM Modi enjoys respect and credibility

Modi mask

Quixotically, the levels of public trust and credibility that Prime Minister Narendra Modi has generated, within India and abroad, is unprecedented since the days of Pandit Jawaharlal Nehru. Admittedly, his supporters are overwhelmingly upper and middle-caste Hindus, though a tentative outreach to the lower castes, dalits and tribals has started. The minorities are caught in the “appeasement”and “alienation” paradox. Their “alienation” today is explained as an inevitable consequence of ending the practice of “appeasement” of earlier governments, to retain them as votebanks. The BJP is less ideologically committed to social and religious diversity than it is to forge a uniform national identity — China style. China faces potential social unrest — a drag on growth. We cannot afford another drag on growth.

Democracy incentivizes  political rhetoric

Democracy is about winning elections, forming stable governments, governing efficiently and ensuring justice. The BJP government has shown it can do three of the four very well. Turning up the heat on corruption has become the leitmotif of the BJP government. The costly demonetisation exercise; the rapid rolling out of the GST despite the associated implementation glitches; the strong action against corporate founders defaulting on bank loans or short-changing customers and suppliers; rapid financial inclusion and the promotion of bank and digital financial transactions to replace the use of cash — all these are initial steps towards combating corruption, increasing tax revenues and improving corporate governance.

But are we doing enough to reign in criminality?

More must be done to reduce the drag of widespread criminality. Reforming the election system to root out criminals; working with the Supreme Court to reform the dilatory judicial process and speed up the delivery of justice; enlarging the reach of judicial services; and reforming the police and prosecution systems are critical to reduce the drag imposed by shoddy implementation of the rule of law.

Use 2018 to consolidate past initiatives with just two new beginnings

2017 was a year of significant disruption and of useful beginnings. 2018 should be devoted to consolidation of ongoing initiatives rather than the scheme-a-month, headline-grabbing strategy of the past three years. Two new beginnings would, however, be welcome.

First, steps to compensate for the collateral damage caused to business, employment and incomes by hurried attempts to show results and win elections. Second, defined pathways to reaffirm the wider social compact between the government and all citizens.

inter faith 2

Adapted from the authors article in The Asian Age, December 28, 2017

“Demonetisation” as a morality play

The politics around “demonetisation” — a misused term for what happened on November 8, 2016 — has taken centerstage in the run-up to the Assembly elections in Himachal Pradesh (that voted yesterday) and Gujarat (which goes to the polls in December). Finance minister Arun Jaitley has added “morality” to the cluster of objectives, that seemingly justified compulsorily replacing 86 per cent of our currency with new notes over a short period of just two months last year.

Whose morality?

Morality is a slippery slope to tread in public affairs. It’s certainly an individual virtue, but at a societal level it’s difficult to define. Consider the moral conundrums that arise while enforcing a law which doesn’t have widespread local acceptance. Rebels with a cause see themselves as morally-elevated outliers. Not so long ago, our freedom fighters were feted for disrupting the peace, assassination or damaging public property. Even today in areas like Kashmir or the Maoist belt in central India, it’s tough to apportion the balance of morality between those who violate the law and others who seek to enforce it.

Our Constitution, quite properly, is silent about “morality”. A quasi-moral concept of “socialism” was introduced in 1976 into the preamble, by former PM Indira Gandhi, as a populist measure. But it sits incongruously with the otherwise liberal slant of the document.

Corruption is patently immoral as it saps national wealth. Measures to fight corruption are part of public dharma. The real issue is: was demonetisation essential to end corruption?

Demonetisation to identify counterfeit money like using a hammer to kill a bug

If the objective was to weed out counterfeit money, which can fund terrorism or even legal transactions, there was no need to impose a tight timeframe of two months. This is what caused widespread panic and disruption. It would have been enough to alert the public to the menace; provide markets (banks already have them) with testing devices to weed out “compromised” notes over time. This is an ongoing activity, that all central banks do routinely, because any note (besides crypto currencies) can be counterfeited.

Better policing can identify & capture the stocks of black cash

If the objective was to capture the stocks of “black” money, held as cash, in one fell swoop, this was better done by making known “havens” of “black” cash — apparently entire warehouses — unsafe for storage through effective enforcement, coupled with strong incentives to come clean. Note that “black” money hasn’t gone away.

Black money was generated even as the notes were being replaced

Demonetisation can do very little to stop generation of black money. The government knows this. It intends to use “big data” for surveillance of potential evaders; embed governance systems with enhanced oversight and enhance transparency. Only improved technology and perpetual, intensive oversight can starve this hydra.

Was it political?

Not least the timing of the move, just before the elections in Uttar Pradesh, India’s most populous state, which sends the largest number of members to the Rajya Sabha, where the BJP didn’t have a majority, could indicate the compulsion to play to the gallery. If this was the motive it worked very well politically — not least, because UP is a poor state with low governance indicators and high levels of inequality. Hitting the rich is a tested populist strategy, perfected by former PM Indira Gandhi, and still held dear by our antiquated Communist parties.

Would Gandhiji have approved?

But demonetisation doesn’t align with Mahatma Gandhi’s precept that “means matter as much as ends”. Hitting tangentially at corruption, at the cost of scorching even the law-abiding, is unacceptable. Anti-corruption measures which ignore the social and economic collateral cost of implementation are suspect. The State has an asymmetric, fiduciary relationship of trust with citizens. Did it live up to its dharma of insulating the honest from State-induced actions intended to harm the corrupt?

Some positives – nudged people towards digital and banked transactions

Undoubtedly, demonetisation did accelerate a shift towards banked transactions and boosted digital payments. Both outcomes are winners. But it’s also true that it put a temporary brake on economic growth by disrupting business and inducing job losses, mostly in the informal sector, where workers and the self-employed are less well paid, and less well-endowed to absorb the cost of a disruption.

Means matter as much as ends

Seemingly desirable steps to make the system honest can have grossly inequitable outcomes, which Gandhiji would have termed “immoral”. It’s possible to reduce corruption by replacing income-tax with a “head tax”. Citizens are more easily identifiable than their income, so very few would be able to escape this tax. If a “head tax” were to replace income-tax, each citizen would pay Rs 3,600 per year. But consider, for 40 per cent of the population, which is vulnerable to poverty, the head tax would be a minimum 12 per cent of even the poverty level income of $1.90 per day. Currently, even an income of Rs 10 lakhs (Rs 1 million), or 22 times the poverty level income, attracts a low effective tax rate. Protecting the weak is cumbersome. It creates tax escape routes, which need to be plugged with minimum collateral damage to the weak and the honest.

GST the first efficient, corruption buster

The good news is that the Narendra Modi government has got it bang-on with its second major corruption-busting initiative: the Goods and Services Tax (GST). Implemented from July 1, 2017, it has also disrupted business and compounded job losses, arising from the shutting down of businesses, which relied on the illegal competitive advantage of avoiding tax. GST is a potent standalone, medium-term winner. This expectation mitigates the interim economic “amorality” arising from the collateral harm to innocent workers and suppliers to such businesses. The proactivity of the GST Council in correcting mistakes and acknowledging errors has only deepened its credibility and conveyed a sense of responsible stewardship. This is welcome.

Compensate for the distress & dislocation


Demonetisation was misguided even if it had “moral” end-objectives. One-fifth of our population, which suffered the most, is in the income segment of Rs 50,000 to Rs 5 lakhs (0.5 million) per year, being workers and those self-employed in the informal sector. They have still not been compensated. Hopefully, the finance minister will apply some balm in his 2018-19 Budget and bring this tragic “morality play” to a happy end.

Adapted from the author’s opinion piece in The Asian Age, November 10, 2017

Is hubris slowing down Modi?


So when does hubris — the corrosive comfort of undiluted power — overtake a government? Conventional wisdom points to three early red flags. First, when routine tasks are ignored for grand ambitions. Second, when party cadres act out of entitlement rather than commitment. Third, when rant replaces reason as public outreach. Has this already happened to the BJP government?

Ignore routine tasks at your peril


First, consider the recurrent trail of routine lapses. Take the embarrassment in July of being unable to get the non-controversial bill to give constitutional status to the Other Backward Castes Commission passed in the Rajya Sabha because BJP MPs did not even bother to attend in sufficient numbers. There is no glory in floor management. Ergo, it gets overlooked. Next, consider the election of Ahmed Patel to the Rajya Sabha from Gujarat. The strategy to keep him out was brilliant. But shoddy execution, or worse, deliberate sabotage, let down the BJP. Finally, the mass death of children in a Gorakhpur hospital. The hallmark of the RSS has been effective management during emergencies and disasters. That oxygen cylinders couldn’t be swiftly organised speaks volumes of how low the cadres have sunk.

Rulers can’t ignore the Rule of Law

Second, consider contempt for the rule of law. Mohan Bhagwat, the RSS supremo, violated the law in Kerala by unfurling the national flag, on Independence Day, at a school in Palghat, contravening a restraining order by the district collector. The order was perverse, based on pique and politics rather than prudence. The manner of its service — just prior to the occasion — was hurried and amateurish. But it was a legal order and anyone violating it is liable to be arrested. Mohan Bhagwat got away. But the lesson he taught the schoolkids and party cadres was that no law is sacrosanct if you are powerful enough.

Gandhiji would not have approved. Disobedience of an unjust law is fine, if followed by submission to its consequences, under the rule of law.


This contempt for the law is visible in the cadre vigilantes protecting cows, supporting unruly, disruptive religious yatras and the demonisation of alternative voices. Add to that, the raging testosterones of a BJP “princeling” in Haryana and you have party cadres which align more with gaali (abuse) and goli (bullets) rather than the galle lagana (hug) that Prime Minister Modi has espoused as the leitmotif of New India. Third, let us consider why no one came away inspired from Red Fort this year.

Outreach by high decibel rote no substitute for passion

The Prime Minister’s speech was a prime example of zombie behaviour, where the mind is elsewhere but the motions are acted out. The wide ramparts of Delhi’s historic Red Fort have set the stage for Prime Ministers to grandstand every year since 1947. Two (Lal Bahadur Shastri and Morarji Desai) barely had a chance to give a second speech before they were gone.

Four others (Charan Singh, V.P. Singh, H.D. Dewe Gowda and Inder Gujral) were even more transient, managing not more than a single speech each from Red Fort. One — Rajiv Gandhi, a young, stunning-looking charmer — was suddenly elevated to the position but never quite unbuckled the pilot’s seat he used to occupy earlier. Manmohan Singh had a decade to hone up his act. But he knew that he was a mere seat-warmer for the Nehru-Gandhi dynasty — having been taught his lesson earlier, when party workers sabotaged his election bid to the Lok Sabha. P. V. Narasimha Rao — a friendless, private man was not given to making big public gestures from the Red Fort. His political games were deadly effective, but played entirely in privacy.

Nehru, Indira Gandhi and Narendra Modi are the only three Prime Ministers who have had the mandate and the charisma to use the ramparts to strut their act. Mr Modi thrilled us in 2014 with his energy and his earthy enthusiasm at reaching out to people — quite a change from the taciturn Manmohan Singh or the imperiously distant Sonia Gandhi. In 2015, he filled in the vacant spaces in his act with data, slogans and acronyms. We were impressed. In 2016, we were still agreeable to look kindly on him, given that the economy was racing along and government performance was projected as trending sharply upwards.

By 2017, the act was flat as yesterday’s soda. This is remarkable considering that Indian testosterones are racing at the government effectively holding off the Chinese muscle-flexing at Doklam and now in Ladakh; Pakistan is reduced to being a mere vassal of the Dragon and economically hollowed out Western powers are fawning at our doors for Indian business.

Modi 2017 Red Fort 2017 (3)

International acquiescence has bred much-needed confidence. But it is disquieting that in domestic policy it has led to complacence, drift and distance from the public. Mr Modi’s speech was rambling, glib, unnecessarily argumentative and just plan stale. The turban was way too shiny to be classy. The stance too casual to be purposive. The look too staged. Very confusing was the discrete use of the terms — Bharat, India and Hindustan.

Bharat, India or Hindustan?

Hindustan was used in the context of pledging support for the victims of the irresponsible Muslim practice of triple talaq. Bharat was referred to as the mata (mother). But it is New India that we seek to build. Meaning?

Bharat, India or Hindustan, all three remember earlier episodes of hubris — disconnects between reality and rhetoric — which ended badly for us. In 1964, we discovered, too late that India needed the world, not the other way around. In 1975, we realised Indira needed India, but we didn’t need her. In 2017 (Delhi municipal and Uttar Pradesh elections), a shallow social revolution met its downfall. In 2004, we tired of using the stock market as a metric of progress. The metrics proposed for New India are similarly flawed. Corruption, poverty, filth, early death and unemployment are long-term outcomes, unachievable by 2022.

Child India

Focus on the essentials, Mr Prime Minister: Ending poverty by providing jobs and social security; improve results in education and health; build infrastructure for the 21st century and professionalise your government. We supported you in 2014. We want to do so again in 2019. But is your party up to this task?

Adapted from the author’s article in The Asian Age, August 17, 2017

FM Jaitley, aim for the sweet spot

Manmohan Jaitley

Former Prime Minister Manmohan Singh, recently released a book titled India Transformed — 25 years of Economic Reform, edited by Rakesh Mohan, at the appropriately historic Nehru Memorial Library. After the obligatory photo-op, Dr Singh turned to finance minister Arun Jaitley and with a beatific smile, handed the book over to him, as if, symbolically, he was satisfied that he could hand over trusteeship of the economy, to the three-year-old NDA government, and walked off, disregarding the speech he was scheduled to deliver.

The reform baton passes on

It was indeed a poignant moment and well chosen, for the economic baton to be handed over. The high-decibel criticism by Left-oriented, liberal public intellectuals of the economic vacuity of the BJP government’s economic policies continues. But the fact is that we are now at a cusp, an inflexion point. In all likelihood, we shall do substantially better on inclusive growth. This may sound incredulous at a time when growth, industrial investment and exports have fallen from the earlier upward looking trend line. But a dip in the industrial investment and growth rate are natural short-term consequences of the BJP having finally walked the talk on corruption.

Pressing the economic accelerator is not enough

Over the first three years, the NDA merely pressed the accelerator harder on the positive legacy of the UPA — rural unemployment support, fast-forwarding Aadhar, digitisation of commerce and banking, financial inclusion, space technology competitiveness, making electricity surplus, making access to telecommunications even more affordable, better transport and urban infrastructure, disinvestment of minority shares of state-owned entities, ensuring fiscal stability and progressively higher financial devolution to sub-national governments, including local governments.

Burying past negativities is good but not enough

It also did very well to bury the negative legacy of the UPA. The biggest achievement is in fast forwarding of expenditure programmes without the viral outbreak of corruption scandals seen earlier. More positively a three-pronged action plan is in place to make public systems resilient to corruption.

GST – the corruption buster

First, getting the GST is the biggest legislative and operational achievement to dampen corruption and enhance value addition by integrating the national market. Glitches remain due to poor drafting of rules which burden the small, honest taxpayer. Many such are the obsessive dedication to maximising revenue, even at the expense of simplicity. As usual the pain is being most felt by those least able to bear it — ragpickers — at the bottom of the urban food chain – their daily income have halved because the “kabadis” (junk yards) they sell plastics and glass to, are playing safe on the likely new tax liabilities. Small individual consultants or homeowners,  who live in one state but get work or rent from another, re similarly caught in a bewildering tax reporting spaghetti.

Bankruptcy & NPA resolution – The crony capitalism killer app

Second, is the frontal attack on crony capitalism — identifying the borrowers who have defaulted on Rs 12 trillion owed to banks, getting the Bankruptcy Act operational and signaling public sector banks that there will be no more “Mundra scam (1950s)” type telephone calls from the government. Reaffirming that sensible lending shall be rewarded and inept or corrupt lending punished.

Big brother must watch use smart analytics

Big data

Third, the proposed use of “big data”, including data from social media, to zoom in on potential tax evasion and crime. Taken together, these actions lay the systemic capacity for reducing corruption.

Aim for the sweet spot

cricket sweet spot

Whilst perfecting its drive at real sector reforms, here are the four “tests” the government must pass.

Defang the trade Unions

First, the unleashing of genuine privatisation (offloading of majority shares in a state-owned entity) as proposed in the long-delayed case of Air India is the winner. It sends the signal that India is open to efficiency enhancing financial restructuring. That it intends to free up existing public capital to create new public goods — jobs, physical infrastructure, improved social services, like health and education, whilst fresh private capital gets infused into the commercially viable supply of private goods — air and rail travel, steel, metals, petroleum and electricity. The Labour Unions are up in arms. This is where privatisation flagged in 2003 under Minister Arun Jaitley and Prime Minister A.B. Vajpayee. Can the Modi-Jaitley team de-fang the inward looking, protectionist, labour “aristocracy” comprising the Trade Unions – the bedrock of the moribund CPI(M)?


Grow private banking rapidly

Second, financial sector restructuring to make state-owned banks commercially viable. Uday Kotak, of the Kotak Mahindra Bank, surely over-stretches when he advocates the  wholesale exit of loss making public banks and their substitution by private banks. But clearly, the strategy of incremental privatisation, as done earlier to enhance telecom, aviation or electricity generation, will pressure state-owned banks to become competitive. This should also circumscribe the ability of the government to use banks like ATMs for populist goodies.

Nail large. serial loan defaulters as criminals 

Modi nail

Third, the strong action proposed for making collusive default on bank loans a criminal act is commendable. It brandishes a big stick for potential defaulters. The intention is virtuous. But experience shows that criminals, especially rich ones, find it easier to evade the law than poor innocents. To avoid this perverse outcome, criminal powers should not be delegated outside the judiciary. The record of tax tribunals and quasi-judicial agencies is not sanguine enough to empower them with criminal powers in addition to their economic mandates.

There is no option except to reform the judiciary through incentives and structural changes in judicial governance. This is a tough nut to crack, but shortcuts will give rise to the miscarriage of justice, vigilantism, and massive public resentment — specially in the middle class, which will be the most impacted in cases related to property and small business.

Remain a classic, fiscal fundamentalist

Lastly, the finance minister’s determination to maintain macro-economic stability has been amply demonstrated. This resolve must not weaken even during the run up to the 2019 general election. This will be the biggest economic win,lo if achieved. The report of the N.K. Singh Fiscal Responsibility and Budget Management Committee 2017 embeds too much flexibility to provide credible guidance for the future. Fiscal fundamentalism is better.

cricket defense

Good politics must also be good economics. There is an appetite now amongst voters for hard reform. This, by itself, is a tribute to the credibility of the NDA government. A populist pre-election budget would be seen by the voters as an early admission of defeat. That is not the winner’s way.

Adapted from the author’s article in The Asian Age, August 9, 2017

BJP – mega political mall


The rout of the BJP, in the Bihar and Delhi Assembly elections, were loudly touted as evidence of the deep roots of the “idea of India” — so dear to the Left-leaning, “secular” intelligentsia. Two years later, Bihar is back in the BJP stable and Delhi limps along with Arvind Kejriwal nursing his 2017 defeat in the Delhi municipal elections. In parting ways with his “less than kosher” partners — Lalu Prasad Yadav and his ilk — and realigning with the BJP, Bihar chief minister Nitish Kumar has apparently, revised his views on the Hobson’s choice between aligning with corruption or with communalism. He has now switched to the latter, as the lesser evil, possibly nudged by Prime Minister Narendra Modi’s public resolve to abolish both by 2022. In the meantime, he forfeits the somewhat unlikely “halo” around him as the leader of a national “secular” Opposition. Muslims and dalits also face this choice now — between a clean and effective, albeit Hindu, government or self-serving, dynastic patriarchs, posing as ersatz secularists.

Does consolidating the Hindu vote equal communalism?

shah dalit home

For the BJP, the charge of “communalism” has little meaning. Ending “casteism” – another vicious scourge, is only possible, if the Hindu vote is consolidated, ending the use of narrow vote banks based on traditional identities, around which regional parties have grown deep roots, like the RJD in Bihar and Bahujan Samaj Party and the Samajwadi Party in Uttar Pradesh.

BJP’s strategy is to consolidate the Hindu vote across regional and caste divides to strengthen its majority government at the Centre and control enough states to cover two-thirds of the voter population. The idea is to become like a mega political mall, encompassing diverse shades of opinion. Smaller parties, like the JD(U) are welcome to buy-in or opt-out, but none would be critical to the BJP’s survival.

The BJP sees no contradiction between resolving to root out “communalism” whilst consolidating” the Hindu vote by ending archaic caste divides. It wants Muslims and Christians, both foreign religions, to harmonise their religious beliefs to fit seamlessly into the dominant local culture.

Deeper decentralisation can be a bridge to communal harmony

naga 2

India is very diverse even within large states. Eating beef and pork is fine in predominantly Christian Nagaland. Bonding over beef is the custom in Kerala for Muslims, Christians and many Hindus. But this would be unthinkable in Uttar Pradesh. A more decentralised India can give greater space for making locally acceptable choices about customs and norms at the local government level. But the principle of subsidiarity is ignored. What can be settled at the village level is decided in Delhi or a state capital where the the minority viewpoint gets ignored in favour of across the board acceptability. Today, local governments lack the administrative, political and financial clout to matter. This means for now, the onus is on the minority community in any area to negotiate workable local compromises on cultural and religious practices which conflict with the locally dominant majority. Detractors of this “majoritarian” approach say this illustrates the disenfranchised status of minorities


To be fair to Muslims and Christians, it is a stretch for them to reach such local accommodations. They have been misleadingly nurtured, since 1947, into expecting that the Indian State shall provide special mechanisms to safeguard their right to religion and facilitate their active political participation, in view of their numerical disadvantage. They have never before, encountered a government that is coldly dismissive of their expectations and has, at best, no desire to go beyond the letter of the law.

muslim women

What does being secular mean?

There is also disagreement on what being secular means. Should the State actively shun anything to do with religion, as in France? Or be even handed with all religions, as in the UK? Or should we further refine our version of secularism. Political theorist Rajeev Bhargava, is of the view that, in India, both the State and religions influence each other. The State actively intervenes in religion — as for example taking over the administration of Tirupati or subsidising Haj travel for Muslims or opening Hindu temples to dalits. Similarly, religion actively influences State action. Demolition of the Babri Masjid by karsevaks in 1992 breached the law. But the State watched passively out of deference to Hindu sentiment. In 1986, an executive ordinance was used to specifically nullify a Supreme Court order granting maintenance to Shahbano, a Muslim divorcee – a practise unsupported by Islamic law which had greatly agitated Muslim clerics.

Modern Indian culture is syncretic – but dominantly Hindu

Shahrukh 2

Modern Indian, popular culture is syncretic but dominantly Hindu, as best illustrated by Bollywood. Our movies cater predominantly to Hindu cultural settings, ironically often on the backs of film stars, many of whom are Muslim. With 80 per cent of the population being Hindu, it cannot but be otherwise.

The constitution reflects the fraternal bond between the State and Hinduism 

Fraternal bonds

Similarly, the founders of our Constitution were prescient in anticipating that Hindu sentiment would be politically dominant. Article 25 of the Constitution, excludes Christian and Muslim religious and social institutions from State regulation. But it specifically limits the fundamental right of Hindus (which includes Sikhs, Jains and Buddhists) to practice religion, by allowing the State to intervene for reforming Hindu religious institutions. This asymmetric provision reflects an assumption that there can never be a conflict between the Indian State and Hinduism. But the potential for a conflict of interest between the State and Muslims or Christians, exists and must be guarded against.

Muslims and Christians are not the only ones isolated by the Hindu revivalism. One-fourth of Hindus (dalits and backward tribal communities) are uncomfortable with traditional, Brahmanical religious practices. Often these are just a cover for hanging onto the asymmetric power structures benefiting the upper and the “Mandal”-empowered backward castes. Babasaheb Ambedkar articulated this apprehension as a deal-breaker for political cohesion.

Testing the efficacy of mega political power

Should we be worried by a BJP mega political power mall? We are schooled to believe that pervasive, political power begets authoritarianism. This hypothesis will now be tested. The BJP believes that a “national” government, in which, political sub-interests, defined by gender, caste, region or religion, “work” the system from within, is better than the template version of parliamentary democracy, in which an active opposition keeps the transgressions of the ruling party “in check”.

The BJP had 100 million registered members in 2015 — 18 per cent of the registered voters. It has a massive majority in the Lok Sabha and shall replicate this majority in the Rajya Sabha as legacy UPA members retire. The BJP directly controls states comprising 54 per cent of India’s population whilst another 23 per cent of the population lives in states ruled by allies or jointly with the BJP. Together this constitutes more than three-fourths of the population. Why then does it feel compelled to grow bigger?

BJP rule

In any competitive market, to stand still is to lose ground. Indian sporting teams are often criticised for lacking the “killer” instinct to convert their strengths into wins. But in politics, as in business, this genetic flaw is an asset. Leaving something on the table boosts the “feel good” factor for all. This has merit in politics, where there are no permanent winners or losers.

Adapted from the authors article in The Asian Age , August 1, 2017

Pensioning-off cows

cow veneration

So is “the cow” (including bulls) a living deity, like the Ganga or Yamuna rivers, to be revered as a “mother”, or just another productive asset like a buffalo or a goat? This debate dates to the Constituent Assembly sessions in the late 1940s.

Cow protection smuggled into a non operative part of the Constitution

constituent assembly

Hindu traditionalist members of the Constituent Assembly wanted complete protection for the cow as a fundamental right. This was stolidly opposed by realists like B.R. Ambedkar, who saw it as a veiled attempt to deify upper caste brahmanical practices, to the detriment of the poor — for whom the cow means a source of milk, meat and leather.

Modernists like Jawaharlal Nehru thought it would blemish the liberal, secular character of the Constitution. A consensus was urgently required. Clever drafting by Dr Ambedkar pleased all by inserting an ambivalently worded Article 48 (on working towards prohibiting cow slaughter) in the Directive Principles, that are not legally enforceable. Therein lies buried the knotty, seven-decade-old problem of what the cow means to Indians.

But Hindu reverence for the cow has increased seven decades later

Neither modern education nor “development” has diminished the demand for prohibition of slaughter. Educated, well-off Hindus, across castes, are avid supporters. Higher incomes enable more people to “Sanskritise” — fashion their customs by emulating brahmanical practices. Vegetarianism is a “luxury” in desperately poor India, as is substituting cereals with vegetables and lentils. The clamour to save the cow will increase as ever more people are economically capable of “assimilating” themselves, culturally, into upper castes. Beef is already an “inferior” food eaten mostly by the poor.

Our “secular” government and political parties are politically expedient

Rather than amend the Constitution outright to reflect this demand, devious bureaucratic means have been adopted to achieve the same effect, whilst hiding behind the economic usefulness of the cow. Nine state governments — Jammu and Kashmir, Haryana, Punjab, Himachal Pradesh, Delhi, Uttarakhand, Uttar Pradesh, Rajasthan and Gujarat — ban the slaughter of cows and bulls outright. Seven states — Arunachal Pradesh, Meghalaya, Nagaland, Mizoram, Manipur, Sikkim and Kerala — allow slaughter. Others permit slaughter of animals who are no longer productive — usually more than 15 years old. The varying levels of “protection” are directly related to Hindu upper caste political dominance in a state. The only exception is J&K — a Muslim-majority state, which bans cow slaughter. In more normal times this would be an example of our “syncretic” culture.

New rules drive Beef markets underground

cow markets

The Union government has chipped in by banning the export of beef and cows, thereby minimising the incentive for cow slaughter. It also promulgated rules on May 23, 2017 under a Central law, Prevention of Cruelty to Animals Act, 1960, which ensure cattle markets are not used to purchase “bovine” animals for slaughter. The rules are onerous. They require multiple certifications, declarations and identity verifications. They will ensure all sale/purchase of “cattle”, which includes buffalos and camels, would end in cattle markets. Curiously, a convenient “out” remains available. Direct purchase from a cattle owner doesn’t attract these rules. The net result will be trading will move to one-on-one sale/purchase, or to large commercial dairy farms — now facilitated by the agricultural land leasing policy. These will be informal cattle trading hubs, without health certification to ensure meat quality.

Ironically, even as the Niti Aayog and agriculture ministry are striving to make agricultural markets efficient, the trade in dairy animals is being driven underground. Perversely, the new rules are being touted as the fallout of a July 2016 Supreme Court order, that was intended primarily to stop the flourishing cross-border traffic of cattle into Nepal and Bangladesh. The loud protests by West Bengal and Kerala and muted noises from Tamil Nadu and Karnataka are as farcical, playing to the dalit and Muslim vote banks.

Are we willing to pay for pensioning-off cows?

Surely, this farce played out repeatedly, since 1948, should end now. Why not have a referendum to establish the extent of support for cow protection? Seth Govind Das suggested this in 1948. The cost would be around Rs 50 billion, equal to the cost of a general election. The outcome, as in Brexit, is by no means certain.

If the existing 190 million (2012 data) indigenous and hybrid cows are to be cared for after their useful life, for say an additional five years (underestimated), the annual cost at a daily spend per animal of Rs 50 is Rs 1.1 trillion.

This is four times the spend in 2017-18 on medical, public health, welfare of SC-ST, backward castes and minorities and social security — spread thinly across around 400 million of India’s income-insecure citizens. It’s more than half the spending on defence. Maneka Gandhi and animal rights activists will be delighted, but it’s impossible to fund a pension scheme for cows publicly.

cow employment

Cow retirement homes run by the private sector on viability gap funding basis will create around one million jobs. But there is no free lunch, even for spiritual or emotional fulfilment. So how many of the 280 million Indian households would be willing to pay an additional Rs 4,100 per year for protecting the cow?

What about the environmental consequences of keeping 70 million old cows

The 1.5 lakh hectares of land to house the “retired” cows can be found. But the additional water resources — far exceeding the needs of 200 million humans — would be a challenge. The retired, unproductive cows will increase methane emission, which are worse than carbon dioxide, by an estimated 0.6 per cent, even as we are struggling to reduce carbon emissions.

Of course, it may never come to this absurd end. Farmers won’t buy cows if they can’t sell them for slaughter. Bulls are redundant in mechanised farming. Buffalos are more productive milk producers. “Nandi” clone bulls and milk white cows might become like racehorses or elephants — the treasured preserve of rich people and temples. And this is how it should be.


If the suggestion by Justice Mahesh Chand Sharma of the Rajasthan high court (now retired) “trends” sufficiently, the cow could become India’s third national animal, alongside the other “big two” —tiger (de jure) and Gir lions (de facto). Welcome to India’s new-age action safari.

cow temple

Adapted from the authors article in The Asian Age June 3, 2017

Modi: Unassailable at three

Modi parliament 2014

Modi enters Parliament for the first time in 2014 in a characteristic “Indian” manner – prostrating himself at the steps of this very British institution. Stooping to assimilate is the Indian way. Photo courtesy Indian Express 

Three years ago, when Modi’s BJP entered Parliament in May 2014, with a never before majority, the “realtors of Raisina Hill” (policy wonks and public intellectuals in Delhi) were full of doubt about whether a country bumpkin from Gujarat could navigate the gilded and suave avenues of Lutyen’s Delhi –  that part of the city, designed by the British for themselves in the 1930s, where todays rich and powerful elite lives and conspires in self-interest.

Modi does a pincer on Dehi elites

True to his Gujarati heritage and much like Gujarati emigrants to the west have done for ages, Modi made no effort to integrate or ingratiate himself into the elite. He cut his own lonely, furrow going around the established elite. Over time the furrow deepened into a moat which effectively encircled and confined Delhi’s elite to gossiping amongst themselves. Admittedly, his was an easier task than what confronted Gujarati emigrants overseas. But the tactic employed was the same. First, entrench yourself in the eco-ystem – get a job or start a small business; next, deepen your control on resources – build up capital and develop local relationships and finally look for gaps to fill – do what the lazy locals will never do.


The Patels – intrepid survivors in foreign lands – a smooth blend of modernity and tradition that makes them outstanding achievers and harmonious assimilators. 

There were initial hiccups. The BJP – essentially a north Indian, middle class party till then – first tried the babu approach of distinguishing itself from the previous government by rejecting even the good things the UPA had done – like NREGA and Aadhar. But Gujarati pragmatism and performance orientation won. The approach changed to building on what existed and exponentially expanding the scale and ambition of projects and policies, to shock and awe the public into abject Modi bhakts (followers). Nothing it seemed was impossible.

Modi’s ratings better than the BJPs

Three years on, the mood within the party is upbeat – not surprising after the massive electoral victories in Uttar Pradesh and then in the Delhi municipal elections. In sharp contrast to Trump, Modi’s popularity ratings beat those of his party. The inanities of the BJP’s rant on protecting cows rather than Dalits or projecting Hindu populism rather than political equality and security for the minorities is attributed by the common person to vested interests in the party – vigilantes who use the party’s hard line as a business or “God men” who use the saffron they wear to encroach on government land. Prime Minister Modi stands tall above this desperate fray for the crumbs of political power.

Sour grapes?

Detractors and cynics say it is hype which is keeping Modi in the stratosphere.  This is lazy analysis. There are three reasons why Modi has embedded himself into the public mind as the harbinger of a better future.

India’s Bill Clinton – responsive, charismatic peoples’ person

First, being of humble origins he feels the pulse of the people and responds to it. Demonetization was a temporary set-back for the economy and cost workers their wages or their jobs. But, they saw it as a plan to punish the corrupt and applauded the effort. Modi did not just rest on the laurel of public acclaim. He has successfully pushed the tax bureaucracy to unearth black money and investigate shady deals. Is this sufficient to end corruption? Clearly not. But it is sufficient to establish Modi’s credibility as having the gumption to take on the corrupt, rich and make them pay for their sins.

Neither Right, Left nor Liberal – for Modi, transactions matter, not ideology

Second, the expansion of social insurance schemes for the poor; progressive expansion of crop insurance; the 200 million Jan Dhan accounts opened; the switch to the direct transfer of benefits for the poor to their accounts; kick -starting the moribund highways program; the proposals to reform agriculture by legalizing the leasing out of land; freedom for farmers to market produce outside the clunky and corrupt, public sector Agricultural Marketing System; the boost in coal production by whipping the public sector Coal India; making Indian Rail more efficient with better services; the improved functioning of government offices – all serve to illustrate positive change.

Stellar stabiliser of the economy

Lastly, the Modi government’s biggest achievement has been to stabilize the economy. Wasteful public spending has been restrained by fiscal discipline; the growth momentum has been maintained and consumer price inflation kept low within the targeted 5 percent per year. New institutional mechanisms are in place now, with the Reserve Bank of India specifically charged to deal with the bad loans of public sector banks amounting to over 12 percent of their average assets.

But there are still promises to keep…

Critics of the government point to the unfulfilled promises on new jobs and the linked poor performance of industry and exports; lack of performance on the promised recovery of black money stored overseas and the continuing civil unrest at home in Kashmir and in the tribal belt, even though the BJP is now in power, directly or in an alliance, in these states. To be sure domestic violence – not least the violence injected by self-proclaimed vigilante groups- is worrisome.  The poor performance in exports is partly a function of a strong Rupee which makes exports uncompetitive but keeps imports, particularly oil, cheap – thereby restraining inflation.  High domestic interest rates protect small savings, particularly of pensioners; restrain the creation of yet another realty driven bubble economy and dissuades gold-plated, bank financed, industrial investment.

Talking freely with people, sharing and learning can build long term credibility

Modi in varanasi

Prime Minister Modi greets the people of Varanasi, Uttar Pradesh – his parliamentary constituency

Trade-offs between economic priorities are always contentious. The key is to evidence why government acts in a certain way and who benefits. Mere rhetoric will not do. It is here that the Modi government falters because of its irrational stand against spelling out how the outcomes of its policies benefit minorities. Consider that, ironically, Modi’s BJP has probably helped more poor Muslims and Dalits, than ever before, via financial inclusion, higher allocations for NREGA and the new crop and social insurance schemes. Yet, the government does not highlight this. Nor does it share granular data, whilst defending its track record on inclusion, which many regard as its Achilles heel. Talking with, not at the people, in an evidenced manner, about one’s achievements, especially when it can silence critics, is good. Try it.

A version of this blog is also available at


Change UP to change India

victory 2

When it comes to winning elections, the sophistication and efficiency of the BJP political machinery is unmatched. Of course, Prime Minister Narendra Modi’s charisma provides the base, which the party leverages, to ensure that their individual candidates win. So what does this historic win — pulling in an unprecedented 77 per cent of the seats up for grabs in the UP Legislative Assembly — mean for the nation. And specifically, is UP the tail which can wag the dog? PM Modi knows it can. This is why he has set five years from now 2022 as the milestone for changing India – not 2019 when the next general election is due.

UP the sleeping giant

The taj

UP has a rich past and a glorious future. It is the present which needs some looking after.

Uttar Pradesh accounts for around 12 per cent of India’s GDP but has 17 per cent of its population. If you sometimes wonder why India doesn’t grow more than it does or why the existing growth is not well-distributed, look no further. UP is to blame for both negative outcomes. It pulls down national metrics on per capita income and growth. It also makes us look bad on social inclusion. Nearly a quarter of all Muslims and the poor (based on the government’s poverty headcount metric) live in UP. The state’s poverty level, at just under 30 per cent, is the second highest in the country, after Assam.

UP – the key to ending poverty

child poor

If the BJP can halve poverty in Uttar Pradesh, bringing it down from 30 to 15 per cent (same as the existing levels of poverty in Rajasthan, Gujarat and Maharashtra), the national poverty ratio will fall by a massive 10 percentage points, from 22 per cent to 12 per cent. Reducing the levels of poverty in UP also has high positive externalities — particularly political. There are sizable communities of migrant workers from UP in Kolkata, Mumbai and Delhi, through whom the message of “achche din” can travel to these metros, generating a “feel good” tsunami.  Consider that if the BJP can make Uttar Pradesh grow at the average rate of national GDP, it would increase the rate of growth of the national GDP by 0.5 percentage points. This additional income, even if it is proportionately distributed across the population of the poor, would reduce poverty to single digits in UP.

Why the BJP is uniquely place to take up the challenge

BJP leaders

Cynics could ask how can we be sure that the BJP will extract the potential? Others think the BJP will face headwinds while picking a chief minister, thereby risk displeasing sections of the winning rainbow coalition. The squabbling in New Delhi in 2014 is evidence that even the BJP is not immune to internal sabotage by disgruntled cadres. The BJP works best when it functions in a vertically-integrated manner — much like the Communist Party of China. Significant decisions are all made at the very top. Targets are determined for lower level formations at the state and municipal levels. These are then vigorously followed up and performance measured against targets. Now that UP is directly controlled by the BJP, the Narendra Modi performance juggernaut can be rolled out uniformly across the state.

So here are three focused ways in which the BJP can be different.

Give UP back to real-time management by it’s bureaucracy

UP officers

UP has many Durga Shakti Nagpals – officers who seek to serve. The present Cabinet Secretary, the Chief Election Commissioner and the PMs Principal Secretary are all UP cadre officers. But two decades of “populist” rule post “mandal” in the 1990s have diminished the excellence, which was the hall mark of UP administration.

First, today UP is a state which is resource poor and deficient in entrepreneurship. Out of the 100 top companies listed by market capitalisation on the Bombay Stock Exchange, only one company — Dabur India — is headquartered in UP. The Annual Survey of Industries 2014-15 lists only six per cent of the total number of factories and industrial workers, and just five per cent of industrial capital in UP. This illustrates that government efforts remain crucial, unlike in more developed states, where private sector initiatives can substitute for government efforts. The Modi magic, of revitalising the bureaucracy through direct interaction and consultation, as is now being practised at the Centre, must be institutionalised. This “direct contact” pattern of administration at the Centre has significantly reduced the earlier proliferation of corruption and silo-based operations. Mr Modi must return Uttar Pradesh to the real-time management of its bureaucracy, who have been sidelined and broken in spirit for too long.
The State in UP has become moribund. It must be reinvented, and used as an instrument for social change.

Make UP the international “laboratory” for agri growth


Second, agriculture is the heartbeat of Uttar Pradesh. Poor rural infrastructure and lawlessness have constrained additional investment in agriculture. Eighty per cent of the poor also live in rural areas. Agriculture based on “per drop more crop”; large scale diversification to non-cereal crops and commercialisation of agriculture outside the subsidy regime format of minimum support prices; cheap fertiliser and energy can pay rich dividends. The new land leasing arrangements should be led by UP, just as Rajasthan has taken the lead in amending outdated labour laws. More urgently, crop yield is not uniform across the four sub-regions. Average agricultural productivity can be increased by 10 per cent by simply pushing up productivity in the lagging central and eastern sub-regions (which account for around one-half of total foodgrain production in UP) to the levels prevailing in the state’s western region, adjoining Delhi and Haryana.

Invest in UP’s infrastructure

gadkari 2

Finally, UP has the worst road infrastructure in North India. Power cuts are rampant, even in Noida, which is a satellite township that adjoins Delhi. A proposal to build a regional air hub to service Agra has been gathering dust because the political alignment between the Union government in New Delhi and the state government in Lucknow was not favourable since 2002. If Delhi plans to link Myanmar and Southeast Asia by road with Afghanistan and beyond, over 700 km of this highway must pass through UP. Some of transport minister Nitin Gadkari’s expertise in getting infrastructure going could be usefully applied to UP.

2017 election results are a gift – use it well

The BJP is known for its executive and managerial abilities; its disciplined cadre; its capacity to ramp up domestic and foreign investment and to link investment to results. Uttar Pradesh is likely to give it the biggest bang for every buck it spends, simply as the desire to do better in UP is matched only by the utter frustration of its citizens over their stagnating future prospects. If UP booms, India will follow. This is one chance that we simply must not lose.


Bangles in Firozabad, brassware in Moradabad, rich textiles in Varanasi, the juciest mangos from orchards across the state, Nimish – the flavoured forth from early morning milking of cows, Mughal delicacies from Lucknow and Rampur, ancient monuments at every turn and a culture bred by centuries of civilised life – UP has it all, except transformational leadership- will Modi be the one? 2022 will tell.

Adapted from the authors article in Asian Age  March 13, 2017


Bulk up to beat the competition


Scaling up is the name of the game in politics and in business. The BJP secured enviable gains in the early 2017 municipal elections in Maharashtra and Odisha. A win in the Goa state election is likely. A possible, albeit messy, near-win in Uttar Pradesh and potential inroads into Karnataka, Tamil Nadu and West Bengal portend that the Narendra Modi juggernaut is rolling out a massive, vertically integrated consolidation of party votes across the three levels of government.

Big, deep pockets business is in

In business, too, big is beautiful. Government banks and oil companies are being merged into competitively-sized entities. Reliance, India’s second biggest company by market capitalisation, after Tata Consultancy Services, still rankles at the loss of the top position due to faltering gas production. It is now hitting back at the fragmented competition in telecom, targeting an aggressive 50 per cent share by 2021.


Bigger publicly owned enterprises and bigger government is the inevitable option if private investment response is weak 

The government sector too is expected to grow. Some of this is dictated by the compulsions of the faltering international economy. Private capital is risk averse when returns are dodgy. Public capital then is the only option. India is terribly under-capitalised in network and social infrastructure. We spend less than one half of what we should to get rid of the infrastructure constraints on growth and security. The government’s budget needs to expand by at least one-fourth to accommodate the necessary capital spend. FY 2017-18 is not budgeted to be different from the past. There is not enough time before the 2019 general election for grounding project plans into reality. Jobs will consequently be funded by public finance.

Citizen anxiety at being left out in the cold

anxious citizens

Should citizens and consumers then be apprehensive about the drive to consolidate and grow across government and business? Not really. Dominance is a systemic outcome of competition. Institutional safeguards can ensure that dominance is not misused to dilute citizen and consumer interests. The scale of operations should be a matter of choice, not compulsion, or the outcome of regulatory nudges. Citizens should rather be concerned that decent jobs won’t come unless businesses and government grow to scales dictated by market parameters.

Multiparty politics only means larger ballot boxes


The political architecture is similarly fragmented. A loose law allows a mind-boggling 1,452 political parties to be “registered” by the Election Commission under the Representation of the People Act 1951. Only 54 parties are recognised at the state level and just six are national parties. Recognition has stricter norms linked to voter share and elected candidates. Believe it or not, the commission’s powers to de-register moribund parties are not explicit.

Multi-party politics has become a fetish, far beyond its usefulness to the average voter. Tightening up on representational norms is possible without diluting the basic freedom to choose one’s political party. Just gearing up the disclosure, internal governance and accounting requirements, to the levels required for companies, can reduce the number of registered parties.

Smart regulation can weed out frivolous parties

Enforcing regulatory compliance can deter frivolous registration and ensure responsible representation. This is illustrated by the experience of companies. Of the 16 million commercial entities operating in India, just one million are registered under the Companies Act 2013, despite the benefits which accrue from registration. It is not as if only large commercial entities choose to get registered. 66 per cent of companies are very small with an authorised share capital below Rs 1 million or just $15,000. But the widespread reluctance to register is because of the accompanying higher levels of disclosure required. Political parties would respond similarly. Only the most serious ones would remain registered if regulatory requirements were increased in the public interest.

Political consolidation as a public good.

Why should we think of political consolidation as a public good? Our fractured and divisive social architecture provides ready opportunities for exploitation of the cleavages for narrow political purposes. We must make it difficult for parties. which cater solely to narrow agendas. Social inclusion fundamentalists would rebel against any institutional constraint on the freedom of a political party to represent even marginal views. But look at the trade-offs. Caste and religion find no place, in our Constitution, as legitimate grounds for political mobilisation. Introducing institutional mechanisms which encourage broad-banding of political platforms is therefore legitimate.

Mandate rainbow nominations for inclusive politics


One way to ensure such broad-banding across castes and religions is to mandate that parties must replicate the prevailing rainbow of castes and religions while nominating candidates in specific jurisdictions. Savvy political parties are already doing so. The BJP broadened its appeal to dalit and backward caste voters in Uttar Pradesh (2017). A quarter of Bahujan Samaj Party candidates are Muslims to demonstrate Mayawati’s good faith while seeking Muslim support. The Samajwadi Party’s tieup with the Congress broadens its appeal to dalits and upper castes — both long-time supporters of the Congress.

In a fragmented political market, institutional compulsions to broaden the electoral base can be an effective catalyst for consolidation. This would be a welcome change from the minimalist strategy of securing the largest number of votes polled by splintering your opponent’s vote share below your own.

Leave room to grow 

Limiting governmental and private sector dominance by constraining their ability to grow has negative social and economic outcomes. We barred Facebook from giving free access to a limited Internet space in 2016 due to the misplaced fear of deep pockets-driven future dominance. E-commerce — similarly driven by deep pockets — has somehow bucked the tendency to protect incumbents. Institutional reform to regulate big institutions is overdue. Smart laws and empowered regulators can sift destructive dominance from scaling up for efficiency enhancement. Bulking up is the international trend. We cannot but conform.


Adapted from the author’s article in Asian Age, March 9, 2017

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