governance, political economy, institutional development and economic regulation

Archive for the ‘bureaucracy’ Category

The price of democracy

beggar

Prof. Ashutosh Varshney of Brown University calls India an improbable democracy — poor, impossibly heterogeneous and multicultural, and ironically, only its colonial heritage keeps it going. So has our hubris cost us plenty?

Why we are not China

Forget comparing ourselves with China today. Are we at least on the same path? No, we are not. Assume a lag of a decade between China’s 1979 takeoff — Deng Xiaoping’s reforms — and India post-liberalisation in 1991. Second, assume that GDP growth is a decent proxy for national effort. Judging by the results, we have tried only one-third as hard as China to grow three decades into the reform process. Have we been tied down, like Gulliver, by democracy’s Lilliputian ropes?

Money or efficiency make the world go around

There are only two ways of increasing growth. Increase investment or increase the efficiency with which capital is used. The latter is tough but critical. Efficiency and stability invite foreign capital in, build supply chains and boost “federated” exports — many economies get a say and a share in the final product. Making the world your shareholder makes politicians more responsible — barring outliers like US President Donald Trump — and who knows, his unorthodoxy might well work for the United States.

Wasting scarce capital

Amravati

India is hugely capital starved. Sadly, it has not done well either in using capital efficiently. And it is not just the public sector alone which is wasteful. A generalised trend of wastefulness springs from poor monitoring systems available to the government, shareholders and citizens, none of which can easily check the data by triangulating information sources.

Over-designed public projects

Bengaluru airport has had charging points in its parking lot since 2008 for electric cars, which will not use them till 2030 – if then. You pay for casually over designed projects. The building of Amravati, the new capital of Andhra Pradesh, represents all that is wrong with our democracy with politicians free riding on tax payers.

Frank admissions of failure are as important as bragging about success

Finance secretary Hasmukh Adhia has admitted that the GST network has failed to provide end-to-end digitisation. We knew this. But speaking honestly and responsibly endeared him to the public. Unfortunately, no one is to be held accountable for this glitch.

Adhia

Cheap finance induces waste

Wasteful use of capital is hardwired into a system which prices capital cheaply. Most business folk will moan about the high cost of funds in India. But the fortunes, domestic and overseas troves of real estate barons and industrial tycoons were built on negative interest rates, with inflation boosting prices but diluting the real interest cost of a bank loan to zero over a 10-year period.

Four matras for democratic success 

Can we take remedial measures? The times are tough. But bad times never last. More important, are we primed to take advantage of the next uptick cycle in world economic growth? Possibly not. Here is a four-point mantra for getting there.

Efficient public services

online

First, the new national government, later this year or in early 2019, must tackle the long-ignored task of public sector reform. It is shocking that economic duality has widened since 1947. The average citizen and business is streets ahead of the government in the effective use of 21st century technology to make employees accountable. Can you imagine how the government would change if the bottom five per cent of employees were sacked every year for poor performance or if the courts disposed of cases quickly? Just focusing on achieving these two and keeping everything else on hold could retrieve democracy in India.

Make data accessible on citizen aspirations & preferences, government performance and business governance 

Second, know your citizens. Make all residents and citizens identifiable, traceable and accessible. Aadhaar is the answer. Make registration for Aadhaar painless and self-declaratory — the ability to cancel out duplicates is supposed to be built into the system — enhance its accuracy in identification; mask the private information better and multiply improved digital recognition equipment. Populate data for citizenship, electoral rights and public benefits, using Aadhaar as the base platform. Transfer all public benefits through bank accounts. Roster all government officials, below 40 years of age, irrespective of grade or cadre, to serve as field-level facilitators wherever they are posted, with specific mentoring targets, to help citizens access their benefits.

The BJP and some regional parties (Trinamul Congress, AIADMK, the Left parties) who have a cadre are ramping up to do this. Down this route lies the threat of democratic abdication. A citizen must be served by the government of the day, not tied to the apron strings of a particular party for accessing benefits.

Link official accountability with efficiency in use of capital 

Third, change public incentives and processes. Switch from lazy budgeting of inputs to specific outputs, achievable over two years and outcomes over five years. Form teams of specifically identified officials to programmes and projects; ensure that there are no transfers and the team remains intact for the next five to 10 years. This will ensure more responsible budgeting; development of job commitment and expertise and improve outcomes. China does not shuffle its officials about needlessly. They stay tied to specific tasks for long periods — many forever. We encourage our officials to forum-shop from one cushy position to another.

Stop fiddling with markets

markets

Fourth, walk the talk. Withdraw the government from being a market participant and it will work better. Markets are like forests. Naturalists like Pradeep Krishen say it is enough to fence barren land off from predators like goats to allow a forest to regenerate. Going with the grain of nature doubles results. Anything else is wasteful and inefficient.

Stop fiddling with markets and they will find their level. Focus on diluting, not alleviating, the pain of those who lose out from markets. Just that can consume all of the government. Do not dilute the bite of markets if you aim for efficiency. Equity initiatives must be front-loaded to enhance competitiveness, not installed at the end of pipe to shackle markets. Caste-based reservations for education, jobs or benefits are an end-of-the-pipe option. They gel perfectly with our real strategy of steady but inefficient, slow growth.

Democracy is not the reason for our woes. It is what we do with it that’s troubling. Democracy implies at least a 50 per cent chance of not getting re-elected. The great Mughals would not have approved of the risk profile. Neither, it seems, do our rulers today.

Adapted from the author’s opinion piece in The Asian Age, July 9, 2018 http://www.asianage.com/opinion/columnists/090718/price-of-democracy-a-4-point-growth-mantra.html

Who rules Delhi?

Delhi throne

Khichdi – Risotto if you prefer the Italian version – is a traditional palliative for Delhi belly. But Delhi’s khichdi style political governance systems are guaranteed to give anybody the runs. So bad is the mess that it is difficult to find out who rules Delhi. The Delhi Government, a contender, appealed against orders of the Union Government to clarify its constitutional mandate.

Supreme Court clarifies the law

The Supreme Court, in its July 4, five judge bench, judgement, patiently re-explained the law, without venturing to drill down to the crux of the dispute between the Aam Admi Party (AAP) government and the BJP ruled Union government – who controls the public servants in the government of Delhi? The dispute closely resembles a Saas -Bahu quarrel – principally, who gets to jangle the house keys and run the house.

Judicial decisions unlikely to resolve political power stand-off

The AAP came to power by promising to the good but poor, people of Delhi, to set right the tyrannical, corrupt Delhi bureaucrats and other elites. The AAP found, to its dismay, that they had less real powers than the Municipal Commissioner of Mumbai. Being a glorified Municipal Commissioner was of no use in leveraging the AAP onto the national level and that too within months of coming to power. AAP chose the path of open, tactically public confrontation with the Union government in a David versus Goliath stand-off.

To be sure, the BJP run Union government’s intention were hardly kosher either. It tried to swat the AAP at every opportunity. The previous Lieutenant Governor (LG), Najeeb Jung – appointed by the Congress, called an end to his stressed innings in December 2016.

Will the Supreme Court verdict change things? India is peculiarly American in its belief that good laws and sound judgements can set things right. There is little evidence to support this belief. Laws, which are out of sync with reality and judgements which are legally correct but practically iffy are not the stuff that good governance is made of.

Expectations build reality. Delhi is often described as “closely resembling a State government”. Delhi is as much a state government as we are a “federal” country – another slipshod simplification used for the essentially unitary form of our polity albeit with some federal characteristics.

How it all began

Delhi government is a “special” child of the Indian National Congress, which was in power in the Delhi Metropolitan Council uninterruptedly from 1972 till 1990. In 1991 the INC decided to embellish their jagir with a totem of statehood- possibly to appease citizens with a magic bullet which would solve all their problems. In 1992 the 69th Amendment to the constitution – prescribed a special status for Delhi. It became a hybrid between a Union Territory, like Puducherry and a State government, like Goa.

But no matter how many new, white Toyota Innova’s Mr Kejriwal adds to his cavalcade, he will remain a Chief Minister in name only and Delhi’s Legislative Assembly a caricature of democracy. This is not because Mr Kejriwal or the legislators are wanting on merits. But the constitutional arrangements militate against them having a free hand in providing good governance.

Kejriwal

The proximate cause of the constitutional spat is that the Union government claims the Delhi government has no independent powers of managing their employees. It must do so only with the concurrence of the Union government. Municipalities face a similar constraint versus the State governments, which sit on their heads. The Supreme Court (SC) has not dealt explicitly with this critical issue. But reading between the lines, two implicit messages emerge.

SC judgement implies Delhi Government competent to legislate and execute on Public services

First, the SC has specifically stated that all matters in the State list, other than the three exempted subjects of Public order, Police and Land are within the legislative authority and hence also the executive authority of the Delhi government. State public services are one such subject at entry 41 of Schedule 7, List II of the State List of the constitution. A plain reading of the SC order indicates that this subject is within the mandate of the Delhi government.

But Delhi does not have its own cadre of IAS officers allocated to it or Provincial Service Officers appointed by it, unlike other states. It is staffed by IAS and DANICS (Delhi, Andaman and Nicobar Islands) officers, made available to it by the Union government, which is the cadre control authority.

Union government’s view on services too expansive

It is unclear where the Union government’s powers to manage these cadres end. Allocation of specific officers to Delhi, training, promotion and disciplinary action are powers intrinsic to cadre management. But must the Union government also approve their posting to or transfer from one position to another within the Delhi government? These are routine decisions which affect individual officers but do not impinge on cadre management.

LG only an “engaged watcher” on all matters except Public order, Police and Land

Second, the SC drew a useful distinction between the right of the LG to be informed of all decisions of the Delhi government and his specific power to reserve a matter for the orders of the President. It was careful to emphasise that the latter is to be used only in exceptional cases. This indicates that the Supreme Court veers towards a rational and harmonious sharing of personnel management powers between the Union and the Delhi government.

The sprawling Delhi bureaucracy prefers the Union government as “Mai-Bap”

A May 21, 2015 notification of the Union Home Ministry espoused the view that the Delhi government has no powers with respect to management of public services on the specious grounds that it has no public services or State Public Service Commission of their own.

The Union government’s unorthodox viewpoint draws support from the all-powerful IAS/DANICS cadre which fear loss of prime status, versus the uniformed services, if they are subjected to control of the Delhi government whilst the police remain directly managed by the Union government. The Delhi High Court will now rule on this sensitive issue.

Dharna

Delhi’s bloated administrative architecture wastes public money. It creates a clash of political egos and a surfeit of elected authorities all elbowing for space in just 700 square km of urban space. Delhi should revert to the 1956 arrangements – Union Territory with an Administrator overseeing the existing four civilian municipalities. But each must be headed by a directly elected Mayor. If the experiment works, India’s metros could finally join the world in participatory local governance.

India’s elite bureaucrats – unshakably resilient

 

Mughals

The great Mughals (16th to 18th century) found it more difficult to manage their extended zenanas than to conquer fractious Hindustani kingdoms. The insidious politicking and power struggles of the women in purdah are well known. Less well appreciated are the strength, stability and support that the zenana afforded to the emperor, as a secure haven of peace and a source of experienced, sound, well-meaning advice. Ira Mukhoty exquisitely documents this aspect of the zenana in her new book -Daughters of the Sun.

zenana

The IAS is the metaphorical “zenana” for leaders of modern India

What the zenana was to the Great Mughals, the Indian Administrative Service (IAS) is to our political leaders at the Centre and in the states. Curiously, even the numbers match. Both the IAS and Emperor Akbar’s zenana — the largest — are around 5000 strong.

The only difference is that, unlike the zenana, the IAS is predominantly male. But this is changing. Like the zenana it is recruited on merit through intense competition. Once recruited, a minimum basic standard of life and respect is assured. But progress onto meaningful positions of power depends on both merit and political convenience. Bad political choices can end careers prematurely. Good ones can lead to a rapid rise.

IAS

Expectedly, disruptions to the existing architecture initiated by the emperor caused great trauma then, with fervent attempts made to subvert the change, as now. Not all disruptions end well either. But that is no argument for not trying to imbue knowledge competition into the workplace, as the Narendra Modi government proposes via the lateral entry of 10 joint secretaries.

Why change?

Modern workplaces have specific needs. Of these, IAS officers have only two characteristics which others may lack. First, they are the culled outcome of the UPSC exam which selects just 0.1 per cent of those who apply. This ensures that genetically they have the required level of raw intellect. Second, they have an accelerated and time-bound promotion career path. This ensures that they will always be ahead of those in other cadres. Even seniority, within a cohort of officers, is based on their score in the UPSC exam and the Mussoorie training academy. These embedded entitlements bestow upon an IAS officer ritual status, attracts respect, and often abject compliance. But an impartial, permanent civil service, as a source for leadership level advice, is an anachronism, for three reasons.

The IAS has no “skin in the game”

First, politicians today need bureaucratic advisers who have “skin in the game” — they prosper with a politician — zenana style — and go down with the politician they support. The need for “trust” and “faith” in the support senior staff around a minister is poorly aligned with the old civil service architecture of impartiality, seniority and permanence.

Quick to learn, but no deep personal knowledge or insight

Second, the explosive force of the knowledge economy and the range of new sovereign interventions call for total immersion for extended periods in a chosen area of work. This is alien to the way the IAS is managed and trained for general management purposes. To head an engineering department, it is not enough to have an engineering degree before joining the IAS. Most useful skills are non-academic and acquired on the job. Only a practising engineer can credibly navigate a politician through the likely cost-benefit of options. Our achievements in space technology, missiles and atomic energy are out of sync with the quality of our roads or public medical care. Both of the latter work areas are managed by an IAS officer at the top. And it shows.

Deep skills do not come cheap, nor do they remain captive

Urjit

Third, skilled help does not come cheap. The pervasive private sector provides the demand for top-level skills where the government can never hope to compete for talent. Only saints would give up private sector options and choose to work in the government, except for short periods, such as to round off one’s CV, enlarge networks and gain face time at the leadership levels. Facilitating short-term contracts in the government for skilled professionals is a good way of achieving the required skill infusion into the administration.

Short term hires should come and go with the government

Expectedly, the contractual top-level hires will be selected only where both ideologies and objectives match. This makes sense for both sides. The entrants and the government know that without an inside track with the political leadership, they would simply run out of time before achieving anything. In public policy, academic credentials have to burnish with zenana brownie points like loyalty and a complete alignment of objectives.

What does short term hire mean for the reservation policy?

Mayawati

This flags BSP supremo Bhen Mayawati’s concern of how to ensure that brilliant Scheduled Caste and Scheduled Tribe candidates do get a fair chance. At present, there is no caste quota for promotions in the Government of India for the elite services. The quota applies only at the time of recruitment. Currently, only two per cent of all joint secretary-level positions have been advertised for lateral entry. But in future, if lateral entries increase to, say, 25 per cent of all positions, the caste quota issue will need to be managed head on.

UPSC selection is not aligned with the hiring practices for short term experts 

Would the UPSC be a safer choice than an in-house government selection committee? Not necessarily. We have seen in the case of the appointment of judges, compromised selection is not the preserve of the government alone. But there should be a permanent selection committee comprising the secretary of the requesting department; two private sector or NGO subject specialists, and the secretaries of the UPSC and the department of personnel and training.

But safeguards to ensure merit and transparency must be built into the process

Lastly, the process adopted for lateral contractual positions must be differentiated from the existing process for internal appointments. Advertisements for contractual positions must specify the required mix of minimum educational requirements and particular work experience, along with the exact job description. Transfer from one specific position to another, during the contract, must not be allowed, to avoid gaming and to protect the incumbent.

Alas, has this come too late?

time

The Narendra Modi government’s move to open the doors for external, top-level skills is extremely welcome. But, as in the case of Air India’s disinvestment, its timing, at the fag end of the government’s tenure, loads the dice against persons of outstanding talent applying for this opportunity. Even the best house help is risk averse and abhors untimely disruptions.

Adapted from the authors opinion piece in The Asian Age, June 18, 2018 http://www.asianage.com/opinion/oped/180618/govts-lateral-hiring-great-idea-bad-timing.html

Follow the money to tackle the fiscal perfect storm

Piyush Goyal 2

Piyush Goyal, the interim finance minister, will need to be a lucky general if he is to overcome the triple challenge of widening trade and fiscal deficits and lacklustre private investment.

Exports – India’s achilles heel

Despite our comparative advantage of cheap, skilled labour and entrepreneurial zeal, export pessimism is endemic — unlike in China. Last year we imported goods worth $460 billion, while exports were just $303 billion, leaving a trade gap of $157 billion. We try and cope with the trade deficit by mimicking the American economy — minus the pull of its global currency. We maintain a strong, stable rupee and high interest rates to encourage inward financial flows of capital to plug the deficit in the external account and protect our foreign reserves.

Our saviors – inward remittances from Indians in the Gulf

Gulf workers

We are blessed that our valiant expatriates in the Gulf states regularly repatriate their foreign earnings to finance their families struggling to survive in India. Net inward remittances — around $70 billion per year — cover around one-half of our trade deficit. The inward flow of foreign direct investment and “hot money” flowing into our equity and debt markets provide the residual foreign exchange for imports.

Aping America’s strategy to manage its external account, is out of context

A chronic trade deficit forces us into economic contortions. One such is high interest rates to generate demand for the rupee, never mind that it permanently disadvantages exports and makes domestic production uncompetitive, versus imports. A new monetary policy announcement is due later this week. If the Reserve Bank of India increases base interest rates, it will be in line with its inflation targeting, rupee strengthening and external account stabilisation objectives.

High interest rates can kill our nascent economic recovery

The consequences for the domestic economy will be harshly adverse. Cheap money and a realistic exchange rate is what drove the Chinese juggernaut for years. Admittedly, it can also create bubbles. But private investment is at risk. The emerging political uncertainty and the yet to be completed corporate insolvency processes — affecting 15 per cent of bank assets — are investment dampners. Higher interest rates could well be the straw that breaks the donkey’s back. Public investment is always a poor substitute for private investment. It comes with the enormous risk of misallocating capital hugely, including for political ends.

A circle of wealth excluding the poor?

Political economy considerations also conspire to maintain the inward financial flows of “hot money”, which boosts stock market valuations. Over the last two months, foreign portfolio investors have sold a net amount of around $3 billion of Indian assets roiling our thin domestic stock and debt markets — eroding the wealth of 40 million equity holders. But it matters little for over 200 million other families, who continue to squirrel away their meagre savings into interest-bearing bank or post office savings accounts, or in gold.

Look beyond tax revenue to fund burgeoning expenditure

HAL

The Central government is constantly walking on a razor’s edge to achieve fiscal deficit targets – which is necessary to avoid stoking inflation. It is a tough call to choose between allowing oil spikes to pass through to consumer prices at the cost of stoking inflation and consumer anger, or to absorb the price increase within the general government finances, at the risk of blowing the fiscal deficit targets. The win-win solution is to find a source of additional non-debt financing, till the full benefits of GST kick in over the next five years. One option is to monetise the public investments made thus far in industrial entities, infrastructure and land.

Find a non-tax source to replace the cushion provided earlier by low oil prices

Ashok

During 2015-18, the government reduced the fiscal deficit by one per cent of GDP because of the availability of additional revenues of Rs 2 trillion from cheap oil. The government should target raising Rs 4 trillion over 2018-20 by monetising public assets, including the sale of equity in public sector undertakings. These capital inflows can help keep the fiscal deficit within three per cent of GDP. This is not easy. Embedded vested interests, which benefit from such investments, would create hurdles. Political capital will have to be spent.

Sell our “crown jewels” and monetise completed publicly financed projects 

NALCO

The disinvestment ministry was notionally empowered last year to discharge a limited mandate with respect to managing government equity in PSUs. But disinvestment remains a programme of simply selling government equity, when the stock market is high, to plug the fiscal hole and keep the fiscal deficit in check. 2017-18 was a landmark year. The government sold equity worth Rs 1 trillion due to very adroit management and with help from deep-pocket publicly-owned entities like ONGC, which bought into HPCL and other institutional investors who generated the demand pull. This was a one-off. The target this year is 20 per cent less at Rs 800 billion.

Air India is a high-profile disinvestment, which can stem the annual loss borne by the government. The 2016-17 loss was Rs 58 billion. Not enough to break the budget but unnecessary, and hence wasteful. No bids were received for it. Blame the flight of international capital to “risk-free” investments. Blame our fragile domestic political environment prior to the general election. But also blame low appetite within the administrative departments to let go of the PSUs that they control.

Don’t mimic the UPA – discipline departments which fight to retain PSU assets 

Air India

It is astonishing how quickly political capital can fade. Prime Minister Narendra Modi’s signature theme was that his writ runs in the Central government. But the foot-dragging in the Air India disinvestment case seems to illustrate that this might have changed. Admittedly, Air India is an iconic brand. For long, you felt you were home once you boarded Air India — remember that familiar smell of curry? Selling it, specially to a foreign investor, is like the British selling Jaguar-Land Rover to the Tata Group. Pragmatic but heart rending. We have yet to become business-like about our crown jewels, as the British have. We sell our assets past their expiry dates and then wonder why we got peanuts.

Focus, diligence and smart choices can make a difference

Success in navigating through this perfect storm will depend on avoiding the bureaucratic gut instinct for “tax terrorism”; monetising public assets in mission mode; monitoring expenditure closely and ensuring fiscal discipline, while absorbing the oil price increase and providing for higher farm gate prices — two politically inescapable imperatives. If the finance minister is lucky, oil prices will subside; America’s tempestuous and unpredictable President will lapse into hubris and the domestic political landscape will change for the better. But don’t wait for it to happen.

Adapted from the authors opinion piece in The Asian Age, June 6, 2018 http://www.asianage.com/opinion/columnists/060618/a-fiscal-storm-looms-dont-wait-for-godot.html

Book Review: Paying the price for aid

AID

Three themes undergird the author’s exhaustive narrative of the politics around foreign aid in India between 1950 and 1975, during the early years of the Cold War — the people who made key decisions; the domestic context and, finally, the geopolitical incentives that shaped donor responses.

The deal makers

come across as being surprisingly entrepreneurial in securing aid. Mercifully, unlike more recently, the political and bureaucratic manoeuvring was almost never for personal gain, other than managerial satisfaction at seeing pet projects fructify.

lobbied for civilian atomic power at a time when hydro and coal-based power was the norm. P C Mahalanobis, a physicist turned statistician, institutionalised centralised planning as a scientific prerequisite for development. C Subramaniam as minister for food ushered in higher agricultural productivity via the Green Revolution. Morarji Desai as finance minister and later prime minister promoted private Indian industry and trade, an outlier view, supported by G D Birla. B K Nehru — India’s economic ambassador to the US; John Mathai and later C D Deshmukh as finance minister, economist I G Patel and L K Jha as ambassador in Washington were more inclined to look to markets, international trade, the private sector and the criticality of macro-economic stability, all of which aligned more with the United States as a development model.

Jawaharlal Nehru and later Indira Gandhi as prime minister; Krishna Menon as defence minister, Sarvepalli Radhakrishnan and later D P Dhar, ambassadors to Moscow; Gulazarilal Nanda, deputy chairperson of the Planning Commission; K D Malaviya, petroleum minister; P N Haksar, principal secretary to Prime Minister Indira Gandhi and later deputy chairperson of the Planning Commission and T N Kaul as foreign secretary were the top decision makers who leant towards the Soviet Union.

The domestic context

But individuals became important only because they seized the moment in a given context. Nehru was opposed to be seen begging for aid. It did not fit with his ideology of non-alignment. But India needed lots of aid. With overt political alignment unacceptable, the second-best option for officials was to conspire and reassure donors, that India’s and their interests were aligned.

America feeds India

The establishment of the Peoples Republic of China in 1949 spurred America to save India from Communism. American aid funded technical assistance, community development, large irrigation and flood control projects like the Damodar Valley Corporation and credit lines for the import of machinery by private industries. The PL-480 programme, starting in 1960, provided desperately needed food grains against deferred payments in rupees. The accumulated amount equalled 40 per cent of the money supply by 1974. The US government generously wrote the largest cheque ever, of $2.05 billion, converting two thirds of the outstanding balance into a grant for India.

But disjointed Geopolitical compulsions act as spoilers

But the Indo-American relationship was an uneasy fit. The 1954 treaty of mutual security between the US and Pakistan was an early spoiler. India’s denial of an endorsement for US military action in Korea and later, in Vietnam, rankled. By 1969, interest in India waned, as President Nixon focused on resetting relations with China. In 1966, India accounted for one-eighth of total American aid. By 1975 it had dwindled to one-eightieth.

Soviet Union industrializes India hoping to strengthen Indian Socialism

Soviet aid comprised projects to build industrial capacity. This fitted Indian objectives of backward area development via the creation of model public sector factories in the “core” areas according to the 1956 Industrial Policy. By the 1970s, Indian industry had caught up, whilst the Soviet Union had fallen behind in technology and run out of revolutionary fervour. Meanwhile, enhanced multilateral, soft credit from the World Bank under Robert McNamara introduced new options to source industrial equipment commercially and competitively.

The West – aligned with fPakistan, wary of China and needing its buying power –  fails to provide arms to India 

The United Kingdom, the ex-colonial power, was best placed to meet India’s defence needs. But it was unwilling to supply arms against rupee payments. Military aid from the US for India was a non-starter, given that Pakistan was a close ally. The 1965 Indo-Pakistan war did not help. In 1971 the US-China détente prompted Henry Kissinger, secretary of state, to convey that America would not come to India’s assistance, against a Chinese attack, in response to India’s military action in Bangladesh. In comparison, the Soviets were generous – supplying military assets more modern that those supplied to China; readily accepting technology transfer and payment in Indian rupees. Consequently, the Indo-Soviet defence partnership has endured.

An informative, closely referenced read for diligent students of South Asian political economy, the author posits that India paid a price for foreign aid, which subverted indigenous institutions of collective decision-making, like the Planning Commission and the Cabinet. This assessment seems overblown. Institutions evolve and adapt. Their efficiency must be measured from real outcomes, not the stated objectives or the rigidity of the institutional framework.

The race towards assured mutual destruction in South Asia was fueled by competitive arms aid but civilian aid strengthened India

However, unregulated military aid has sparked off an arms race and contributes massively to the regional welfare loss from insecurity and high defence spend. But just as surely, civilian aid cushioned the negative impact of natural and economic shocks, boosted infrastructure and enhanced human development — all of which helped preserve the integrity of India’s nascent democracy. Individual, institutional or national egos were bruised in the process. In hindsight, that is a small price to pay, for what is today a sustainable and increasingly equitable, growing economy.

Adapted from the authors book review in Business Standard, May 23, 2018 http://www.business-standard.com/article/beyond-business/paying-the-price-for-foreign-aid-118052200013_1.html

Are Marwaris taking over our heritage monuments?

Red fort

Someone else, better equipped and trained should do this routinely


Somebody needs to fund heritage preservation. Why not the Marwaris and Banias? After all they funded the National Movement for Independence. But try telling India’s die hard, Left Liberal crowd that a person in desperate need of a public toilet, does not care, whether the plaque above it gives credit to a public-sector company or a private entity. An especially abled person, with a yen for travel, couldn’t give two-hoots who paid for the ramp that makes heritage monuments accessible on her wheel chair.

None of this will wash with those who hold public management of “national” monuments and public sector white elephants dear to their heart. They would rather see them collapse, gradually, than hand them over to the private sector for making them user friendly.

Our heritage, our identity

Last year, in September, the government launched, what should have been an innocuous and much needed initiative to seek non-state (private) interest in providing better facilities at our heritage sites in exchange for on-site advertising. This is explicitly not a revenue generating partnership. No additional fee or charge, unless approved specifically by the government, is to be imposed by the non-state partner.

ex-IAS, Minister Alphons, off to a good start

Things moved surprisingly fast after ex-IAS KJ Alphons got elected to the Rajya Sabha from the BJP and joined the government as minister for tourism. Thirty-one entities have been shortlisted to “adopt” 95 monuments and sites across India.

These entities called “Monument Mitra (friends)” are required to prepare a vision document detailing what needs to be done to improve the visitor experience and how they would go about doing it, as a part of their corporate social responsibility (CSR).

The good news is that, this time around the public-sector has been spared the near compulsory burden of footing the bill. Most of the interested entities are private companies except NBCC (India) ltd. – a construction PSU for the Old Fort, New Delhi and the State Bank of India Foundation for the Jantar Mantar complex, New Delhi.

Dalmia Bharat Ltd for the Red Fort

But the selection which grabbed the headlines was the one signed with Dalmia Bharat Limited for the Red Fort in Delhi. Left Liberal sentiment was outraged at this seeming mortgage of India’s iconic heritage fort, to the Dalmia’s – an old Calcutta/Delhi based family business.

It is unclear, why the Dalmias are interested in the project, except to generate goodwill with the government and amongst citizens in their home city. The potential for getting a free Dalmia promo in the national TV reportage of the annual Independence Day spectacle at the Red Fort on August 15, might have also been a motivator.

Keeping art and heritage “aficionados” out of the process, generates suspicion

The vision document or the MOU, spelling out what the company intends to do has not been publicly shared. The Committees reviewing the expressions of interest; the vision documents and approving the MOUs consist only of the relevant government departments, to the exclusion of non-state actors, particularly from the extended arts, architecture and culture community in Delhi.

As expected, exclusion breeds unnecessary suspicion and distrust. The Modi government seems to shy away from the active participation of non- state actors in decision making. The previous government of Sonia Gandhi-Manmohan Singh went overboard in the other direction, possibly to deflect any blame from itself. A healthy balance between the two extremes would help.

The Dalmias – hard nosed businessmen, far from the sensibilities of culture.

Ramkrishna Dalmia, a Marwari from Rohtak, was the founder of the Dalmia group. Thomas Timberg notes in – “The Marwaris” that, like all entrepreneurs of the early 1900s he made his money from speculation in silver and then went on to become one of the three largest Indian industrialists along with Tata and Birla. But unlike the other two groups, the fortunes of the Dalmia’s have waned.

Dalmia Bharat Cement is a listed company with a market cap of just around Rs 220 billion – around one half of the smallest 100 top listed BSE companies. Its CSR focus is on energy conservation, rural development and solar power applications. Providing and managing visitor facilities for a significant historical monument is a significant departure from its main line of business. Of course, that is no reason to dismiss the effort outright. But it does raise doubts about their ability to perform, to satisfaction, even if the intent is genuine.

Not too many private takers for cultural spend

Government argues that corporates are not exactly lining up to spend scarce money on historical monuments. They must make do with those who are interested, even if they will have a steep learning curve. Mechanisms for technical support to the Monument Mitra and oversight of their activities, are being put in place. Cultural czars however, thumb their noses at such amateurish attempts to break into the rarified world of culture, art and heritage architecture.

To be fair to the government, not all selections, have the same problem. The well-known Aga Khan Trust – which restored Humayun’s Tomb in New Delhi, has been selected for the Aga Khan Palace in Pune; The premier hotel chain ITC and a GMR entity (builders of the Delhi airport) have been selected for the Taj Mahal and so on.
Dalmia Bharat Limited – a cement manufacturer and infrastructure developer – is an outlier for the Red Fort. One wonders why the government does not share the rationale on which the decision was made with interested citizens. This would allay fears.

Marwaris

Suspicion of the Bania (India’s mercantile caste) is deeply imbedded in the Indian psyche, possibly anachronistically. Even the Marwaris and Banias might have moved on from the rapacious image that Left Liberals have of them. We shall know soon enough. By Independence Day, August 15, 2018.

Also available at TOI Blogs https://blogs.timesofindia.indiatimes.com/opinion-india/are-marwaris-taking-over-our-national-heritage/

 

 

An “Ambassador” amongst “box wallahs”

Rasgotra

Maharajakrishna Rasgotra, India’s foreign secretary from 1982 to 1985, records that in 1948, contrary to the popular perception, the wealthy “Doon School wallahs” preferred to join the domestic services, where they could keep an eye on their assets, and that the IFS boys were at a premium only amongst the urbanised, “sophisticated girls of marriageable age and their even more pretentious socialite mothers”! Things have changed considerably since then. Ambitious Indian girls and boys now routinely choose to work and live abroad, on their own steam, rather than as “diplomatic baggage”.

But true to nature’s rule, when one door shuts, another inevitably opens. Losing out in the marriage market place has been compensated now for the IFS by  major Indian corporates wooing them post-retirement. Just-retired foreign secretary S. Jaishankar has been picked up by the Tatas to head the group’s  overseas operations, reporting to Mr N. Chandrasekharan, the executive chair of the board of Tata Sons, the holding company of all Tata enterprises. The board already has two retired civil servants — Ronen Sen, a ex-IFS officer and former ambassador to Washington, and Vijay Singh, an ex-IAS officer who served as defence secretary. But unlike these board level directors, Mr S. Jaishankar will be more substantively involved, with a hands-on role, as the President of a business vertical. “Descent from heaven” is how Japanese business describes the practice of absorbing retiring senior bureaucrats, who have held key positions, to cushion them from a hard landing in the real world.

Jaishanker Modi

Mr S. Jaishankar is reported to have said he was happy to join “the Tata Group… India’s most respected brand globally”. Just this simple endorsement of the Tata business leadership, from a recently retired foreign secretary, who was selected personally (unusually) by Prime Minister Narendra Modi in 2015, to replace a serving foreign secretary, Sujata Singh, is sufficient to justify the Rs 6 crores that he is speculated to be paid per year. As far as value for money in advertising goes, it can’t get any better for the Tatas.

Despite the 1991 liberalization, Indian business remains constrained by red tape at home. Overseas, it is an orphan, with little formal support from its home government. Blame our perverted colonial legacy for this. The British came to India to trade, profit, export and rule. They used every trick in their mercantilist book of “free trade”, including the selective use of state power and the law, to benefit British companies. But, in a classically hypocritical stance — which incidentally appealed greatly to the convoluted sensibilities of upper-caste Indians, the average British officer feigned a horror of being in bed with business interests. The “boxwallah” was an inferior being as compared to his Army or civil service brethren, who were on a morally superior mission of civilizing India.

Colonial hypocrisy persists – “it is not the business of government to help business”

This “red line” between government and business, which Free India inherited, though always surreptitiously porous, has long since dissolved for India’s domestic service cadres — except for odd cases of the most particular officers. The foreign service, however, has taken to these new commercial roles, over the past decade, as the overseas business interests of private Indian corporates have expanded. This is a welcome outcome of liberalization.

Talk of being a market-led economy is hollow, unless the government works actively to grow the Indian private sector at home and abroad. At the most minimal level, this involves opening doors abroad for our businessmen. This is what retired IAS or revenue service officers having been doing for business interests, at home. But opening doors is low-level stuff, albeit with high personal returns. More potentially transformative, is the opportunity to develop an institutionalized public-private partnership, around the human resources required, by “India Unlimited” to become an A-level international player.

Big is not beautiful

With 162 missions overseas, the Indian Foreign Service looks extremely stretched, with just 600-plus serving elite officers. Expanding the service — using the existing generalist skills-based platform on which it is recruited and trained — would be a costly mistake. It would be far better to add the human resources, specifically needed in the ministry and in the missions overseas, through multiple entry options – lateral contracting, deputation from other services based on relevant skills and selective promotion from within.

Create a new position-based Apex Public Service Ecosystem

The origin of an exclusive service for external affairs, as opposed to a combined one for political and external matters lies, in the Government of India Act 1935. The idea at that time was racist. A separate “political” wing to deal with Asiatic powers — namely the Indian princes (there was already a separate home department for police and security matters) and a “foreign” wing to deal with the European powers.

Is it time now to end this farcical divide. “India unlimited” should have a seamless, internationally competitive and standards compliant architecture. inside, out. An integrated, elite Apex Public Service ecosystem for the Government of India, consisting of no more than 3,000 officers, could be a targeted support mechanism. Selected by the UPSC on merit, at mid-career, with a minimum experience of 10 years, it would provide the specific position-based skills and expertise, required for formulating policy and representing India at technical negotiating fora in trade and intellectual property; fiscal management, including tax; economic development and technology; social protection; human development and human rights.

ambassador

A foreign secretary has boldly and transparently opted to step directly into an executive role in an Indian corporate entity. Over the last decade retired IFS officers have taken to self-acquiring a life long title, copying the US practice, of “Ambassador” – a reminder perhaps of their once hallowed status as a flag officer oversees. Now, many more may cross the divide between them and the “boxwallahs”. But till it becomes common to see retired IFS folk jostling amongst the corporate crowd, it will be odd to see an “Ambassador” parked at Bombay House, the Mumbai headquarters of the global Tata empire, rather than at Birla Building in Kolkata, which is the original owner of the brand.

Adapted from the authors opinion piece in The Asian Age, April 28, 2018 http://www.asianage.com/opinion/columnists/280418/govt-india-inc-time-to-diffuse-the-red-lines.html

India’s 50-50 reforms

half reforms

Unlike politicians, who can choose their targets, business leaders have to dance to the tune of  shareholders, who buy or sell, based on the existing or the future bottom line. In politics. it is relatively easy to change the goal posts or indeed, shift the goal itself.

Changing goals

In India, the current metric for political performance, is jobs. Self -selected by the Bharatiya Janata Party, this may become a self-goal because even globally, there are few, near-term solutions.Prior to jobs, in the noughties, it was all about boosting economic growth — where again headwinds have built up. Before growth, it was about ending poverty in the 1990s. Earlier, in the late 1960s and till the mid-1970s, it was about boosting agriculture, becoming self-sufficient in food and avoiding famines. Even further back in the 1950s, heavy industrialisation and infrastructure were the mantra. Of course all these are part of development. But sequencing matters. Also, pancaking more reform targets on the existing ones, confuses even the reformers.

Partial success abounds, but excellence less visible

Seventy years on, we are only narrowly competitive in manufacturing; our infrastructure is vast but shoddy; agriculture has low productivity levels; 40 per cent of us are either poor or are vulnerable to poverty; we are still stretching for sustained real growth in high single digits; unemployment is rife and the participation rate in the workforce is a low 44 to 48 per cent, with women faring worse than men.

This is not to trash what we have achieved. But it is useful to look beyond the efforts made by the successive governments, at the outcomes and ask the question, why are the results always worse than expected?

Elusive transformative change

Tribal protest

Transformative change is disruptive. We have been slow in embedding credible instruments to mitigate the cost of disruption. This increases the risk perception of change, leading to a public push-back on reforms. Consider how poorly we acquire land in public interest. The instruments for identifying, determining and managing the acquisition are loosely supervised, at the cost of ensuing inequity and poor transparency.  Massive amounts of mineral resources continue to lie buried in tribal areas, whilst tribes prefer to eke out a subsistence level traditional life, rather than participate in the process of development. The overriding fear of every property owner, or occupier, is of being gypped in the process of acquisition, by forces beyond their control. In a democracy we cannot ignore insulating people, especially the poor, from the cost of disruption.

Public trust and credibility in short supply

Managing change successfully, requires a governance system good at modern parenting rather than a patriarchal approach to directing and controlling people and events. Our governance systems still follow the colonial legacy of collaborating with entrenched elites to get things done, somehow. Those affected at the bottom become a hindrance rather than participants. There is very limited institutional appetite or capacity to deal directly, as a change agent, with those who are most affected by change. Even when specific processes, like consultation are provided for, the approach degenerates to ticking the box, rather than using the opportunity to gather feedback on the process, test assumptions and obtain buy-in for the way forward.

“Accountable discretion” is not an oxymoron

It does not help that there is a near ubiquitous ban on the transparent use of executive discretion — prompted by misuse of the privilege in the past and a judicial preference for impossibly rigid rules, regardless of their negative impact on implementation.Consider, for example, the burgeoning non-performing loans of banks. The rule bound approach to bank lending insures the lender- manager, if sufficient security against the loan existed, on paper, when the loan is approved. The focus is on achieving secured lending targets rather than adding economic value. This makes gold plating of projects, to increase the notional value of an asset, a mutually convenient tactic between the lender and the borrower, especially at times when the real lending rate is low. Never mind that it can adversely affect the project’s viability and thereby the repayment capacity of the borrower. The public sector no longer trusts its employees. But ending supervised, executive discretion has significant efficiency costs.

Chasing impossible scale 

We succumb easily, to the insidious temptation to effect instant change at sub-continental levels, rather than build change, bottom upwards, block by block. India is heterogenous without parallel. For us, the political model should be Europe, rather than China. Multi party politics in India requires sufficient elbow room for diverse political agendas. The political architecture may prescribe the objectives and principles of public management. But being flexible in program implementation is a must.

The Constitution fixed past challenges, but under-provides for the future

Our constitution reflects the challenges faced at the time of independence rather than today’s priorities. Integration fears at the time led to a centrist constitution. This is what enabled the Union government in 1959 to dismiss the first elected E M S Namboodiripad government of Kerala. The governor of a state, appointed by the President, acting on the advice of the Union government, is another centrist feature as are the emergency powers of the Union government.

Overlapping mandates

The capacity constraints existing at independence shaped the lop-sided division of mandates between the Union and the state governments, with the former unduly burdened. The sub-state or local government came into existence only through a 1993 constitutional amendment.Delhi is a good example of poor inter-governmental allocation of mandate resulting in a governance logjam. Overlapping mandates confuse citizens. and reduce accountability. Consider that Members of Parliament get elected by getting drains made and Members of Legislative Assemblies by promising higher prices for agricultural products or by proposing a separate flag for their state — all areas outside their mandates.

Poor arrangements for resource management

The constitutional scheme for recruitment and management of the bureaucracy is unduly complex and diffuses accountability. Officials must be “owned” by the level of government they serve. Fiscal resources, at every level of the government, must be aligned with form, which should fit the functions executed at that level.

Avoid the Banyan Tree 

banyan tree

The top-down, centrist approach has the disadvantage of an overblown apex crushing the little people below. Remember, nothing grows under the Banyan tree.Change, sensitive to mitigating the costs thereof, flexible implementation of norms driven from below, with primacy for real value addition can deliver 100 per cent results in reforms.

 

Adapted from the author’s opinion piece in the Business Standard, March 27, 2018 http://www.business-standard.com/article/opinion/india-s-half-baked-reforms-why-are-the-results-always-worse-than-expected-118032601102_1.html#

Junk policy for action

parliament

Policies mean very little, unless there is a national consensus behind them, because governments change in a  Formulating a policy is a clunky, time- and effort-intensive, process. It should be attempted only if massive structural change is necessary. India has rarely been in the game of big bang reform. Our forte is incremental change. For this, key actions with outsize results are more significant than policies.

Industral licensing became ideological & lasted well past its expiry date

Also, policies can haunt a country for longer that necessary.The Industrial Policy Resolution of 1956 was one such. It was inspired by the seductive early achievements of the Soviet Union. The Bombay Plan 1944 formulated by leading industrialists, including the redoubtable JRD Tata, implicitly supported massive state intervention and regulation to protect domestic industry from foreign capital and competition. This became the trap, chaining private enterprise in regulations and excluding it from capital intensive “core” sectors.

Never mind that Jamsetji Nusserwanji Tata had invested in Asia’s largest integrated steel plant as early as 1907, helped by a buy-back arrangement from the British Indian government, which also laid a railway link to the site. It was India’s first public–private partnership (PPP).

tatasteel

It took us over eight decades, till 1992, to come around to the idea that leveraging public resources with private management and investment was cleverer than autarkic public investment. It took another 25 years for us to come to terms with foreign investment. In the meantime, India missed the bus of industrialisation and manufacturing, even as China marched ahead, from the 1980s, to become the factory of the world.The short point is that making a policy is no panacea for achieving results.

Were the existing low-level of health outcomes unachievable without a policy?

Health is a state government subject under the Constitution in India. But a National was formulated in 1983. Despite three decades of central planning since then, health outcomes vary significantly across states and aggregate achievements are unimpressive.

Gradual privatisation of SOEs is ongoing because there is no policy to stop it

Balco 2

Conversely, structural change is often implemented without articulating a policy.Consider the privatisation of state-owned enterprises. The National Democratic Alliance government under Prime Minister Atal Bihari Vajpayee found it impossible to build a consensus around privatisation. A comprehensive privatisation policy was therefore, never attempted. The Industrial Policy Resolution of July 1991 — which sought to weaken the stranglehold of the government over industry — had shrunk the industries reserved for the public sector to atomic power, defence, mineral oil, mining of coal, iron and other metals and the railways. This enabled the sale of minority shares in the other public sector undertakings (PSU). Then finance minister Yashwant Sinha used the 1999-2000 Budget to reduce the reserved sector to “strategic” PSUs in atomic energy, defence and railways only. All others could be privatised.

Gradual disinvestment has been ongoing, primarily with the intention of raising revenue. This year the government anticipates an all-time high of Rs. 1 trillion from disinvestment, being 30 per cent of non-tax receipts, other than debt.Seasoned bureaucrats will advise never write something down, unless you need to.

Electricity remains a “vexed” business despite reform legislation and policy

Merely articulating aspirational objectives in a policy will not achieve results. This has become particularly true in an uncertain world, made even more unstable by technology development. Clunky state action tends to come late and gets clogged into stranded assets.

This is the fate of our Mega Power Policy with 30 GW of power generation stranded because of low demand or disrupted fuel supply. Policies create huge inertia. Consider that as late as 2015-16 the Budget Speech sought to create 4 GW of additional power capacity, even as stranded power assets were building up.

Foreign policy is different 

ASEAN

Some policies are intended to signal political alignment and intent rather than become an entry point for concrete action. falls clearly in this genre. The “Look East” policy of the Manmohan Singh government was followed by the “Act East” policy of the present government — both signaling our interest in South East Asia. But substantively little has changed in the years since, even as China has gone, from being a dominant economic power to a power-hungry bully in the region.

Paris 2016 – the world laid to rest, climate policy & switched to voluntary actionable metrics 

India does not have a comprehensive  We tend to put development before the environment — in exactly the manner other developed countries have grown. This is pragmatic. The 2016 recognises the futility of having a single for the world. Instead, it defines a global target — reversing aggregate carbon emissions to keep global temperature rise within 1.5 degree Celsius of pre-industrial levels. Countries now evolve their own action plan, keeping in view their development needs. Collective action works better than global posturing.

Imagine the impact on Google’s share value if it bound itself to follow a medium term policy

Consider that multinational companies do not formulate business policies in an autarkic manner. They define strategies which, nimbly align with global trends to  eke out the maximum value for themselves. This is a sensible approach. We should get away from announcing sector policies. Instead, we could define incremental and jointed action plans, which result in achieving national objectives.

Google folllows the money. We could follow the Directive Principles in our Constitution

happy girl

National objectives do not need to be defined afresh. A close look at Part IV of our Constitution will suffice. The Directive Principles of State Policy were formulated more than 75 years ago. Our task is to put in place the action points to achieve them, via the annual and medium-term budgets. Politicians love announcing policies and programmes because these can be narrowly targeted at specific beneficiaries for votes. This is the downside of the dharma of  We should junk sector policies as an instrument of development. Intellectuals will disagree. But pragmatism must trump ideals.

Adapted from the author’s opinion piece in Business Standard, February 26, 2018 http://www.business-standard.com/article/opinion/junk-sector-as-an-instrument-of-development-118022500673_1.html

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

stunted

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 https://blogs.timesofindia.indiatimes.com/opinion-india/bjps-new-script-defending-the-losers/

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