governance, political economy, institutional development and economic regulation

Archive for the ‘India’ Category

Bimal Jalan reflects

Jalan book

 

exercises the writer’s privilege to box his reflections between three inflection points. The first is 1980, ostensibly because 1977-79 was the first time the Congress lost power at the Centre. The second is 2000, being the start of a new millennium. And 2014 is the bookend when the Bharatiya Janata Party (BJP)-led National Democratic Alliance (NDA) formed a majority government.
Obscure inflection points
Of these, the choice of the first two years as turning points is not immediately obvious. Conventional wisdom regards 1991 to 2014 as a near continuous development period, barring the fractious interregnum of 1997-99. In the 1980s, it is 1984 that dominates, as the end of an era with the assassination of Indira Gandhi and the beginnings of Rajiv Gandhi’s brief “Camelot” phase. The year 1980 is significant only because Sanjay Gandhi died in an air crash in June and Mrs Gandhi aged visibly. The choice of 2000 is similarly obscure, except for broadly coinciding with the start of Atal Bihari Vajpayee’s NDA government.
Dr Jalan – man for all seasons
But this is mere quibbling. The book is unconstrained by structural rigidities. It provides reflections, spanning Dr Jalan’s seven earlier publications since 1992.  It can’t get better. Dr Jalan was in the Rajya Sabha (2003-2009); the longest serving governor of the Reserve Bank of India (1997-2003) since 1992; finance secretary; secretary banking, chief economic advisor and India’s executive director to the IMF and the World Bank.
Seven key reflections
Readers would choose their own favourite reflections. But this reviewer was intrigued by the following seven.
Low public savings retard investment 
First, Dr Jalan favours the conventional view that the persistent gap between India and the fast-growing economies of Asia during the last four decades of the 20th century is explained by our low levels of investment. For this he squarely blames our ideological decision to invest in public sector industries, which failed to generate savings for future investment and instead bled scarce tax revenue to fund financial losses — a familiar story even today.
Colonial style administration ill equipped for challenges
Second, he red flags the fact that from the 1970s, we did very little to enhance the competence and efficiency of public administration. We still lack the required composition of skills and experience in the public space to provide 21st century results.
High expectation, poor execution
Third, he bemoans the fact that we unfailingly adopt best practice priorities — take the national priority for agricultural growth. But we fail miserably in making supportive policies and rules. We have throttled agriculture by ignoring the interest of the farmer to serve the interest of the consumer. Similarly, we prioritise a progressive fiscal policy. But the revenue from direct taxes stagnates while regressive indirect taxes are buoyant.
Sustained, high growth misaligned with political incentives 
Fourth, Dr Jalan’s term in the Rajya Sabha convinced him that deep political reform is the key to change India. And who could disagree? But some caveats apply. Decentralisation, as flagged by Jalan, is certainly desirable for enhanced effectiveness and public participation. But, it will not, by itself, serve to reduce the size of government. In fact, employee numbers and expenses are likely to increase as scale effects disappear.
Union government muscularity erodes state government autonomy 
In a similar vein, it is true that the Union government tends to erode the federal structure by misusing governors for narrow political ends. But constitutionally, we are a “Union of States with a centrist bias”, per political pundits, and not a federal state. Parliamentary norms and conventions are routinely subverted — a self-goal, since this reduces Parliament’s credibility.
Dysfunctional parliament erodes its own credibility
Dr Jalan cites 2006, when the budget was passed without discussion, illustrating political expediency of the worst kind. But it is open to question whether the existing process for annual Budget presentation and examination remains a productive exercise or has become mere form without substance. The cabinet system of decision-making, underpinned by the principle of collective responsibility, was undeniably subverted during the United Progressive Alliance government, since political power was dispersed beyond the government. But this was poor practice rather than a structural flaw. And it appears to have healed itself after 2014.
Judiciary – safeguarding the constitution 
Fifth, the judiciary, rightly, comes in for high praise, for progressive jurisprudence, safeguarding the principle of separation of powers, and the primacy of the Constitution. But entrenched territoriality in the judicial appointments process remains contentious.
Public sector banks – out of control
Sixth, Dr Jalan recounts, financial reforms after the Narasimham Committee report of 1998 enhanced the resilience of Indian banks. But he leaves the reader begging for more on what went wrong over the last decade to inflate stressed loans to crippling levels. Are not politicised leadership and boards the problem in public banks? And given the stakes, can UPSC selection – as Dr Jalan suggests – really be an effective bulwark? Would not ramping up private shareholding, with the government holding only a “golden share” be a more effective solution? More generally, how effective are the existing prudential norms, for limiting exposure to sector, corporate or currency risk?
Tax reform – only half done?
Seventh, Dr Jalan’s view that it is unnecessary to reopen the constitutional scheme for inter-governmental division of taxes is curious. Tax pundits advocate that GST be extended to alcohol and petroleum.
jalan 2
It is a broad canvas on which reflects, as befits one who has helmed public policy since the 1980s. Readers will look forward to his take on the more recent developments — that is, since 2014.

 

Adapted from the authors Book Review in Business Standard, September 18, 2017 http://www.business-standard.com/article/beyond-business/bimal-jalan-reflects-117091801405_1.html

 

Keeping our children safe

Kid security

Violent crimes against children are grabbing headlines. The latest is the sexual assault and murder of a student in a private school’s toilet in Haryana’s Bhondsi, near Gurgaon. However, Haryana is not the most dangerous state for kids. That dubious distinction belongs to Delhi, with a crime rate (crimes against children per 100,000 population) of 169. Chandigarh follows at 68. The safest states for kids, per the National Crime Records Bureau data, are Jharkhand, with a child crime rate of just three, followed by Bihar, at four.

Long term negative impacts of child abuse

The World Health Organisation estimates that in developed countries, six per cent of adult depression, alcohol and drug abuse; eight per cent of suicide attempts; 10 per cent of panic disorders and 27 per cent of post-traumatic stress disorders are due to abuse during the first decade of the victim’s life.

But there is scanty scientific evidence, in developing countries, of the drivers — the sources and location — of child abuse. David Finkelhor, a sociologist, tellingly comments that “there is more experimental science in the toilet paper we use every day, than in what we have to offer abused children or families at risk of abuse”.

Crime data

In India, where the general standards of personal security and protection of human rights are low and public resources are stretched, child abuse can easily become just another statistic. Crimes against children increased from 14,975 in 2005 to 94,172 in 2015. Over the same period, violent crimes increased at the rate of 5.5 per cent per year — much faster than the growth of the population. Sadly, the proportion of crimes against children to total violent crimes, increased from seven per cent in 2005 to 28 per cent in 2015. Our children are increasingly more unsafe.

With whom does the buck stop?

Preventing such crimes is a shared responsibility. Initiatives include regular oversight and counselling of risky families by specialised agencies; early identification of high-risk adolescents to aid them through high school; imparting life skills training to make children streetsmart and reducing access to alcohol, drugs and weapons.

Inevitably, poorer kids are more at risk than rich kids. The same applies to other population segments at risk — senior citizens and women. The well-off can cocoon themselves from a prevailing ecosystem of insecurity. But for other vulnerable groups, it is the State which must step in to offer protection.

First, increasing the effectiveness of policing aimed specifically at controlling crime on the street and in public spaces is the key. Predators seek out low-security havens — parks, lonely lanes and unoccupied spaces to strike. India is historically under-policed. The UN standard is 222 police personnel for every 100,000 population. India has never crossed 140. Singapore — that haven of orderliness, which all Indians marvel at — has 1,074; disciplined Japan has 207; the European Union has around 347 policemen per 100,000 population.

Even this aggregate data exaggerates the level of police available for citizen centric, local policing — beat patrols, traffic management, crime prevention, detection and investigation. In India 60 per cent of the police are occupied guarding government buildings and assets (such as CISF & RPF); patrolling the borders (BSF, ITBP, SSB); quelling riots, fighting insurgency or doing VIP bandobast (CRPF and state armed police). Local policing must be strengthened much, much more.

The police is too busy with other stuff

police action

Comprehensive police reform has never been tackled seriously despite a series of commissions — starting with the National Commission on Police Reform, 1978, and ending with the Second Administrative Reforms Commission, 2007, all of which recommend broadly similar measures. The police mandate is fractured between states and the Centre, leading to silo functioning. The Central police forces are significantly better resourced than the state police forces, though the latter are directly concerned with controlling crime. The buck often stops with the police. But they are poorly led. Senior police officers skip from helming one complex area to another, where they may have no prior experience and no long-term allegiance to the specialised force they command. Even junior officers and constables are neither specifically recruited nor are they permanently slotted in specialised areas, like crime detection and investigation; communications; community policing; traffic management; cyber security or intelligence and riot control.

The “danda” is still the primary instrument of policing

Second, the use of technology to identify high-risk locations and victim behaviour and profile potential predators is constrained by the low educational qualifications of the personnel. 86 per cent of the force consists of constables who have merely passed their Class 10 or at best Class 12 exams. The officer cadre is thin and inadequately skilled. Service conditions are terrible. Police personnel regularly do 10-hour to 14-hour long shifts, with no weekly time off. Police housing, of indifferent quality, is available only for just one-third of the personnel. Worse, the police force is highly politicised and tends to rely on fear and the use of brute force, rather than by earning the respect of citizens — a colonial hangover. These conditions are not conducive to attract committed, qualified recruits.

Too few first responders to save lives and manage trauma

PS tent

Third, improving the first responder reaction, can save lives and minimise damage by getting victims to healthcare facilities. But there are just 15,500 police stations across more than 650,000 villages and road links may not be the best. Of these nearly 10 per cent lack even a wireless link. There are only 164,000 vehicles with the state police forces. Their spread across locations is likely to be highly uneven and concentrated in the major cities.

Better oversight by government of security arrangements in schools

Other than improving policing, viable short-term options include better oversight by the government education departments over school administrations. Value-add community participation, like authorising Parent Teacher Associations to certify the school’s adherence to minimum safety and security standards, can help.

Decentralise security to groups of parents & kids

cop teaches

Get kids and parent groups to collectively enhance their own security. Readers may remember the captivating proactivity of kids in outwitting, admittedly bumbling, adult, minor criminals from the 1950s era, in Enid Blyton’s Secret Seven and Famous Five series. Fiction can become a reality — once the imagination and interest of the kids is ignited. Herein lies the fastest and most effective route to making our kids safe.

Adapted from the authors article in The Asian Age, September 15, 2017 http://www.asianage.com/opinion/columnists/150917/to-keep-our-kids-safe-all-have-a-role-to-play.html

 

Will NITI get it’s hands dirty?

Rajiv-Kumar-NITI

Rajiv Kumar, the new vice-chairman of the Niti Aayog, has made development of an organic, Bharatiya model of development as his mission. He is likely to encounter three problems in this endeavour.

A new, local model of development is doomed from the start in a globalised world 

farmer 2

First, in a post-ideology world, marked by rapid technological transformations, economic models become outdated even before they can be tested. In these uncertain times, feeling the rocky river bed with one’s feet carefully, while crossing turbulent economic and social currents, seems the wisest option.

Second, isn’t this what Bharat has always done. We have been obsessive about the “uniqueness” of India, which seemingly requires all international experience to be adapted for use locally. This is not necessarily a bad thing, though it has its downsides.

Scaling up rapidly more important than localisation

school lunch

Consider that in the five decades after Independence we have stuck, like leeches, to the Nehruvian development model of ersatz socialism based on a massive industrial public sector accompanied by the outrageous neglect of agriculture, private enterprise or international quality education and health facilities. This, when most other emerging countries, in East Asia, Southeast Asia and Latin America, switched over to a modified Anglo-Saxon, neo-liberal strategy from the 1970s and reaped the benefits of rapid growth.

To be sure, even after 1991, the reform model we followed was Bharatiya. Its core ingredients were incremental rather than big-bang reform — a strategy Russia followed with disastrous results — and careful sequencing of sector reform to minimise the pain from reforms.

It is unclear, however, whether Bharatiya incrementalism helped the poor. Chancel and Picketty (July 2017) estimate that over the period 1980 to 2014 the share of growth accruing to the bottom 50 per cent of adults was 11 per cent in India; 13 per cent in China and only one per cent in the United States. Meanwhile, the top one per cent of adults garnered 29 per cent of the growth in India. China did better by containing the share of this segment at 15 per cent, while the US did worse at 34 per cent. More worryingly, the next nine per cent of adults, from the top, garnered 37 per cent of growth in India, significantly more than in China (29 per cent) and the US (32 per cent). Where we failed spectacularly was in protecting the middle 40 per cent of adults, who got only 23 per cent of the growth versus 43 per cent in China and 33 per cent in the US.

Be shrewd and businesslike not ideologically shortsighted

One Bharatiya innovation which succeeded spectacularly was the phased introduction of currency and capital convertibility. This modified-market approach was validated by India escaping the ill-effects of the 1997 East Asian currency crisis. It is significant that Malaysia followed our innovative approach, endorsed by Jagdish Bhagwati, by reimposing capital controls after 1997, and Iceland did similarly in 2008.

Similarly, our choice of shying away from “big bang” privatisation of the public sector, unlike Latin America in the 1980s and Eastern Europe in the 1990s, worked well. We chose instead to liberalise controls over private investment, thereby enabling private companies to grow and compete with the public sector. This strategy has paid dividends in civil aviation, telecom, minerals and electricity generation. Incremental private sector investment now dominates these sectors and a competitive market-based economy has emerged.

Simultaneously, we contained the social cost of reforms. But a similar policy has not worked in banking. We were too hesitant to give up the political power which comes with the government owning public sector banks. Private banks today account for just one-third of banking assets. The massive economic problem of stressed loan accounts, amounting to around 14 per cent of publicly owned bank assets, is a consequence of our not following through by liberalising the financial sector. Bharatiyata has, unfortunately, become synonymous with crony capitalism in banking.

Aping the turtle gives time to pull a reform coalition together

The GST is operational today due to a strategy of incrementalism, driven by the need for building inter-government consensus. Early indications are positive both on the increase in revenue collected and the enhanced compliance by taxpayers. But the jury is out till the final results come in by April 2018.

In a nutshell, Bharat’s economic policies have always been unique and contextual. Some observers would even say we obsessively reinvent the wheel. It will thus be a tall order for the Niti Aayog to evolve a new Bharatiya model of development, which is completely unknown to us, or the world.

Don’t fix what isn’t broken

Third, do we need a new model of development? The existing model has served us well. The areas for deeper reform are well known and agreed. Indeed, many are already on their way. Hopefully the 15th Finance Commission will continue the task of decentralising fiscal resources, by increasing the share of devolved resources from the 42 per cent existing today towards 50 per cent. This would push the Union government to be more selective in its interventions based on the time-tested principle of subsidiarity — not doing anything that can be efficiently done at a lower level of government. The government is already allocating more resources to agriculture, education and healthcare, which had fallen through the gaps earlier, while also stepping up allocations for defence and infrastructure.

Avoid the temptation to centralise functions – There is enough to do for all.

At the helicopter level of grand plans and policies, there is no gap which the Niti Aayog can address. In fact, it would do well to exercise forbearance in areas where individual ministries are better equipped to take the lead. Where Niti can add value is in addressing the root causes of poor implementation. Tony Blair’s Service Delivery Unit did this to marvellous effect in the UK. Malaysia and Tanzania thereafter copied the template.

Check the plumbing in government. Massive efficiency gains are low hanging fruit

dirty

Niti should focus on the nitty-gritty of getting the plethora of good intentions, embedded in policies, implemented on the ground. This goes beyond close monitoring of targets or punishing laggards. The devil lies in clogged delivery chains, poor metrics to measure results and misaligned incentives, all of which need to be painstakingly mapped and then innovatively declogged. It’s a plumber’s job that needs to be done. Is the Niti Aayog willing to get its hands dirty?

Adapted from the authors article in The Asian Age, September 7, 2017  http://www.asianage.com/opinion/columnists/070917/is-niti-aayog-willing-to-get-its-hands-dirty.html

 

The Mughal with a heart

MEAzam3

Mughal – e – Azam is a quintessential Indian story. A benevolent Emperor – Akbar – faces the rulers dilemma of how to discipline his wayward son – Salim, who would rather marry his love even if it means relinquishing his inheritance. It does not help that Anarkali – his chosen one is a strikingly beautiful, dancer, an accomplished singer and poet, but by no means socially deserving (remember what it was like in the stratified 16th century) of marrying a Prince. After all Kings do not marry for love alone!

In the end guile wins. Rani Jodha Bai – Salim’s mum, gets her wish fulfilled that Salim must not die – Akbar spares him in battle. Salim has his wish fulfilled. Anarkali is allowed to marry Salim. But only for one night before she disappears – ostensibly killed by unknown men. Anarkali’s mother gets her wish fulfilled by getting Akbar to revoke the death sentence he has passed on Anarkali in the hope that her absence would cool Salim’s ardour. In return Anarkali must secretly leave the kingdom to live quietly elsewhere whilst Salim lives on, alone and drunk, in the belief that she has died. Akbar gets his wish fulfilled – the son he had prayed so hard to get, is preserved in body to inherit his empire.

So, at the very end, everyone, who is anyone, lives on, albeit with regrets and dissatisfactions. Of course, many commoners die or get maimed, as battle fodder, in the war between the armies of the rebellious Salim and his father – Emperor Akbar. But it is normal for the grass to get trampled when elephants fight.

The story of Mughal e Azam is timeless. The dull duty to live by long established social norms, even at the cost of personal happiness, is as alive today, as it was five centuries ago. Akbar’s dismay at a son unimpressed by his enormous inheritance but enraptured by his beloved instead, is a story which has been milked dry by Bollywood. Rani Jodha Bai’s stoic acceptance of the social norm that it is not for Salim to choose his bride and her passive connivance in a possibly fatal slug fest between her husband and her son in battle, where the only sure loser would be her, is the stuff that the myth of Indian womanhood has been built around.

MEAzam4

And what about Anarkali herself? An accomplished artist and poet whose only wish is to serve and obey the Emperor and protect her beloved Salim from self- destructing.  Treacly? Too naïve to be real? Call it what u may. But there are millions of girls out there living their lives as modern day Anarkalis – accomplished but disempowered, giving but getting very little in return. Useful lives truncated unfairly.

And what of Salim? Born with a silver spoon in his mouth, honed to fight and rule, he pleads with his parents to feel his pain at not being allowed to love. But he never spares a thought about reciprocity in the relationship, like sharing his parents pain at his willful behavior – so unbecoming a template ruler, who must put the good of the State and its citizens before all else.  The British and the Bhutan monarchies have been quite good at this. Most parents today would probably identify closely with the betrayed Akbar whilst Salim’s willfulness would probably resonate with the younger folk. Just goes to show that the world doesn’t change even in five centuries, as Shakespeare’s extended works also show.

This epic was first filmed in 1960. The screen play was written by the legendary K Asif; lyrics by Naushad; Prithviraj Kapoor played Akbar to Dilip Kumar’s Salim and Madhubala’s Anarkali.

Feroz khan

57 years later Feroz Abbas Khan – the well-known Mumbai based impresario directs a musical, which recreates the magic on stage. In a tribute to the original, he sticks close to the 1960 script but embeds it in a new medium. The results are breathtaking. The production has world class quality and finish. The visuals are imaginative and effective. The kathak dance sequences are spectacular.   In the Delhi edition, playing now at the Jawaharlal Nehru Stadium Theatre, Priyanka Bharve plays Anarkali to perfection and steals the show. The financial support is from Shapoorji Pallonji who incidentally also financed the 1960 movie.

The lyrics are in Urdu/Hindustani but a simultaneous translation into English is helpfully beamed alongside. It seems odd that the Indian Council of Cultural Relations (ICCR) which funds mediocre Indian talent to spread Indian culture overseas has not snapped up this fantastic production for doing the rounds in London, Dubai, Tanzania and Sydney – all cities with a large Indian diaspora, where it is bound to be very well received. For showcasing North Indian medieval culture, in an internationally competitive manner, Mughal e Azam is as good as it gets.

MEAzam 2

Privacy – an elite fantasy

privacy

Elite concerns are usually disconnected from the ground reality. For the 1 per cent of Indian who live privileged, cocooned lives, the judicial right to privacy created by the Supreme Court yesterday will add yet another layer with which they can insulate themselves from the “barbarians at the gate”. So, here is what the rich may now be able to do which they couldn’t earlier.

Is the right to euthanasia next?

First, they may now be able to refuse medical treatment and die in their beds, peacefully, instead of being compulsorily hooked up to tiresome, life-saving machines in hospitals. But try explaining this “right” to the millions of poor Indians for whom just getting admitted to hospitals is still a dream and refusing treatment would be unimaginable.

Deletable past lives

Second, the well-heeled may now be able to press for being judicially forgotten – all traces of their past lives and identities expunged, giving them a fresh start without having to flee to distant London or arid Dubai. Contrast this with the Herculean efforts the average Indian makes to become part of a database and have an officially recognized identity – a voter card, a passport, a PAN card, anything which proves that she exists.

LGBT sex may become legitimate

Third, those with alternative lifestyles – the Lesbian, Gay, Bisexual Transgender (LGBT) community might now hope to be free of the notoriously archaic Section 377 of the Indian Penal Code, which criminalizes everything other than straight sex. But would this give them the right to marry a partner of their choice; adopt children or be socially accepted?

Evidencing crime will become harder

Now ponder the downsides. Law enforcement agencies struggle to manage terrorism, Naxalism, urban mafiosi, drug pushers and armed rural gangsters even today. “Privacy” concerns will provide a legal shield to undermine information collection, crime detection and investigation. Nothing less than the over-the-top, draconian Armed Forces (Special Provisions) Act – used today only in the “disturbed” areas in Kashmir and parts of the North East – would be effective. Since gangsters can afford to hire the best lawyers, the violation of their fundamental right to privacy in the process of enforcing the law, will now become a favourite ploy to keep these worthies free to wreak havoc.

How intrusive is the Indian State anyway?

Will this fundamental to privacy help the 200 million slum dwellers or the unknown millions who sleep under the stars on urban streets? Is not our fear of the “big State” overblown? The India I know is under policed, under governed and under regulated. There is a plethora of agencies, laws and rules to bind down anyone and yet very few – mostly the timid, those mindful of their public image and the law respecting middle class get intimidated by the legal spaghetti. The rich buy their way out of any mess and the poor are so inured to danger and risk that it is second nature for them to live with uncertainty.

Biometric targeting of beneficiaries to be abandoned?

Take the case of Adhaar for verifying the identity of those using the Public Distribution System (PDS). Recent studies in Jharkhand by responsible social scientists – Jean Dreze and Reetika Khera – found that 15 percent of the eligible PDS beneficiaries were excluded because of technical glitches or access problems in using Aadhar as a test of identity. But 85 percent of the beneficiaries were targeted correctly. If the right to privacy eliminates the use of Adhaar, we will be back to what Rajiv Gandhi famously called the 25 percent approach to poverty reduction – where 75 percent of the funds are siphoned-off by intermediaries. How and why would a reversion to a system which has huge inclusion errors (ineligible people getting benefited) be any better?

Big data to be throttled?

Finally, consider how retrograde is the fight by “right to privacy” advocates against big data. It is big data – the billions of pieces of information on human behavior and preferences linked to specific human demographics, which enables algorithms to predict trends, thereby aligning products and services with customer needs. This is what makes big data commercially valuable. In price sensitive markets like India, telecom and e-commerce penetration is being driven by the potential to monetize big data. Putting brakes on this process means putting brakes on the rolling out of technology services which will become more expensive if the actual user is to pay for them.

India lost an opportunity in 2014 when facebook- Bharti Airtel wanted to roll out free internet services on mobiles. TRAI regulations ensured that this venture never took off, thereby slowing down internet access for all except the 300 million people in the upper most income segments who can afford it.

Tilting at windmills

Nandan Nilekani is now an evangelist against “digital colonialism” in the context of tech majors like Google and Amazon aggressively expanding their presence in India. We should be wary of tech industry insiders playing the “anti-foreign” card. Similar attempts were made by the infamous “Bombay Club” to scuttle the 1992 economic liberalization. Their contention was that liberalizing the domestic market was fine but Indian industry should continue to be protected from foreign competition. We are fortunate that the government of the day paid no heed to this self-serving agenda.

Keep India open for competition

India is a big economy with very shallow industrialization. We need to remain open to all economic actors – domestic and foreign who want to invest in India. It would be a huge mistake to emulate the xenophobia of the United States and draw up our bridges. Data is the new oil. Data security needs to be ensured, irrespective of whether data is stored in India, or overseas. But generating anti-foreign hysteria is not in our interest as we try to integrate into global supply chains and become a part of the global value creation eco-system.

It is easy enough to legislate rights. We have many notional rights. Creating a level playing field for all citizens to enjoy these rights, equally, is another matter altogether.

Also at http://blogs.timesofindia.indiatimes.com/opinion-india/privacy-an-elite-fantasy/

Indian Railways: Slow and unsafe

suresh prabhu

It seems to be raining rail accidents these days, with two in swift succession. The hapless Suresh Prabhu is a good general but an unlucky one. He made sweeping changes in Indian railways (IR) since November 2014 when he became Minister. Most dramatic was his willingness to diminish his “empire” by merging the rail budget with the national budget. Similarly, far reaching was his delegation of financial powers for purchase and contracts away from the moribund Railway Board to the General Managers of the sixteen different railway systems which manage operations. Good management practise, yes. But more importantly it severed the ministerial potential for graft. Not many ministers have done similarly elsewhere.

Suresh Prabhu – a good but unlucky minister

Mr Prabhu has offered to resign owning up moral responsibility. Prime Minister Modi may have to let him go, reluctantly. Such is the dharma of politics. Having another accident on his watch would be unacceptable! Of course accidents are unlikely to stop merely by replacing the minister. Data collected by the National Crime Records Bureau records that in 2014 IR suffered 28,360 accidents or 78 accidents per day. So the chances of an accident happening, anytime, are high.

IR is low on transparency 

IR would have us believe otherwise. In a document titled “Transforming Railways, Transforming India” issued in 2016, reviewing achievements since 2014, the number of accidents over the period 2009-2014 is mentioned as an average of 135 per year which resulted in 693 deaths. The National Crime Record Bureau data puts the number of deaths from railway accidents in 2014 as 25,006, with an additional 3,882 people injured. The discrepancy between the IR and the NCRB database is due to creative use of data by IR, which reports only “consequential” accidents involving derailments or collisions. The NCRB data is comprehensive and based on the First Information Report filed with the police for all accidents connected with rail travel.

IR not to blame for 62 percent of accidents

To be sure, not all the 25,006 railway accidents in 2014 were due to the fault of IR. 62 percent of these accidents occurred due to “people” error – travellers walking negligently on railway tracks and getting run over or falling from over full trains. But even around 11,000 accidents  year is worrisome.

Rail still safer than road transport

To be fair to IR, their safety record should be compared with the other option available to travelers – road travel. The safety record of road travel is even worse. NCRB data for 2014 records 450,900 road accidents in that year with 141,526 deaths and 477,700 injured. The combined length of the National and State Highways, which carry the bulk of the traffic, is around 220,000 km or twice the length of rail track. The number of accidents however is 16 times more; the number of deaths is 6 times more and the number of injuries is 123 times more. Whilst the safety of road travel is a poor metric to use, it does provide a perspective of the objective conditions, in which IR operates.

Other than the likely moving out of Suresh Prabhu and the resignation of the the Chairman of the Railway Board, the other – more worrisome fall out – is going to be a typical short-term, defensive response of putting safety above all else. No private utility could have survived without doing as much, routinely. Consider,how tangled the Nuclear Power negotiations became when government legislated to put the onus of criminal and civil liability for accidents on the private sector suppliers of nuclear power equipment. But government service providers have more leeway in avoiding criminal action against them for safety lapses.

Safety or speed – a false binary

But the fact is that choosing between fast, modern trains and safe travel is a false binary. The populist, Luddite approach of slowing down the speed of trains, to avoid mishaps, is like asking car owners to go back to Ambassadors to reduce the risk of accidents by traveling slower. Technology allows you to travel both faster and safer. Air travel is for example both faster and safer than road travel. The Hyper Loop, when it arrives, is expected to boost both safety and speed at lower cost. The Indian Railways compete with other means of transport like road and air. It must provide the expected level of speed, convenience, comfort and safety which comparable transport options already embed. It has failed to do that, thereby losing marketshare to road transport over the last two decades.

Just as high-speed highways and the growing network of air routes has changed the way Indians travel, the Railways must also offer a bouquet of services to suit the differentiated needs of specific routes and category of customers. High-speed, premium railway transport on high-density routes radiating out from the hubs of Delhi, Mumbai, Kolkata and Chennai can transform travel by rail. Similarly, the rapid expansion of metro lines is a smart option to reduce the urban carbon footprint and road congestion.

Both speed and safety are a function of reliable track infrastructure adequately insulated for unregulated traffic ingress and suitable rolling stock. The planned high speed, dedicated, rail traffic corridors intend to achieve precisely these objectives – much like expressways do in highways.

Sans investment, neither safety nor speed is possible

None of this — speed, safety or security — is possible, unless we step up investment in Indian Railways. We cannot manage the 108,000 km of track and 11,000 trains which run daily, by jugaad, penny pinching, dodgy maintenance schedules and techniques, antiquated rolling stock, poorly trained and equipped personnel and management systems, which have not changed since the first train ran in 1853.

Corporatize IR for efficiency enhancement

Indian Railways must be corporatized so that it can shine like other public-sector companies like National Thermal Power Corporation, Indian Oil Corporation and Steel Authority of India. This is impossible as a government department because the administrative and financial rules are unsuited to the dynamics of running a business.

rail repair

Shun politics – Let IR become commercially viable

Railway tariff cannot be subject to politics. The same passenger who has no problem paying Re 1 per km for bus travel between cities pays just 28 paise per km of second class, rail travel and 45 paise per km in reserved sleeper class. Suburban rail travellers pay just 18 paise per km. This is an unsustainable and unnecessary subsidy, undeservedly enjoyed, mostly by the middle class. Rail tariff for non-AC travel must be increased to remunerative levels, thereby generating funds for improving the quality of services.

The spate of accidents has focused public attention on the need to restructure IR. What needs to be done is well known – using technology across the service delivery chain – track development and maintenance; signaling; rolling stock; communication; disaster relief and management systems. But none of this will happen unless Indian Railways is set free from the bureaucratic constraints which bind down its management cadres today. We can save lives, reduce the fiscal burden, improve rail services and make the economy more efficient by corporatizing IR.  Time to walk the talk on good economics also being good politics.

Adapted from the author’s article in The Asian Age, August 24, 2017 http://www.asianage.com/opinion/oped/240817/making-trains-safer-and-faster.html

Is hubris slowing down Modi?

Hubris

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

Venkaih

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.

Gandhi

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 http://www.asianage.com/opinion/columnists/170817/is-a-sense-of-hubris-slowing-down-modi.html

Well begun is half done

BOOK REVIEW
India Transformed
25 years of Economic Reforms
– edited 
Penguin Viking 
670 pages; Rs 999

 

India Transformed
Curating 31 essays into a story on India’s economic reforms can be a giant yawn. But Rakesh Mohan, a videshi economist and a veteran of four major government committee reports, is up to the challenge. 
THE PLUMBING WHICH CHANGED INDIA
Indians believe that the actions of civil servants determine the future of India. This is an abiding fallacy. The truth is, starting from Jawaharlal Nehru to Narendra Modi, it is politics and political leaders that set the tone, whilst civil servants dutifully follow with the plumbing. This book is not about the broader political economy of reforms. Those stories have been told elsewhere. Instead, this book examines the practices and processes — back-office stuff — that achieved reform objectives. Expectedly, therefore, essays by civil servants and public intellectuals dominate this compilation. 

 

INDIA TAKES CHARGE OF MACRO ECONOMIC STABILITY
C Rangarajan marks 1991 as a watershed moment in the  Montek S Ahluwalia agrees and debunks the J Bradford DeLong (2001) and Dani Rodrik Arvind Subramanian (2004) proposition that the 1991 reform process was overhyped; that merely becoming business-friendly would have been sufficient to yield the maximum value; that external liberalisation was merely genuflecting to the Washington Consensus. He asserts that the reform architecture responded to the local context and was designed for medium-term results. Y V Reddy deconstructs the role of fiscal federalism in stabilising state budgets. Laveesh Bhandari evidences this by citing best-fit policies and programmes innovated by states using these additional devolved resources. Jaimini Bhagwati reviews the process of capital market liberalisation that was key in enabling competitive industries to grow. 

 

USING THE GROWTH DIVIDEND
Top diplomat Shyam Saran traces the post-cold war, benign, unipolar world that gave India breathing room to grow till the 2008 financial crisis. His successor in the foreign office Shivshanker Menon establishes how economic growth engendered new foreign policy options for India — a view endorsed by Martin Wolf, who advocates even greater proactivity in world affairs. Sanjaya Baru links the recalibration of India’s security matrix to the new-found confidence from successful reform. Tarun Das points to the quiet success of Track II initiatives in forging defence and nuclear cooperation. Harsha Vardhana Singh, details how substantive tariff rationalisation opened domestic industry to competition. However incomplete, domestic factor market reform shackled export growth and enhanced the trade deficit. N K Singh and Jessica Seddon illustrate how public and private roles moved from mere co-existence to co-evolution, especially in infrastructure development. 
THE MARGINALISED 
 
rural India
But the benefits from economic reform did not accrue symmetrically. postulates that domestic labour market and regulatory rigidities continue to dull the growth potential in small manufacturing. Ashok Gulati argues that liberalisation of the exchange rate, lower industrial tariff and private investment norms never benefited agriculture due to institutional rigidities. Devesh Kapur documents that enlarged access to education was not accompanied by quality enhancement. Naushad Forbes rues the stagnation of Indian R&D spend as a proportion of gross domestic product and the skew towards science research, rather than technology development, which can constrain innovation. Nachiket Mor et al are sceptical that stepping up private investment alone can result in catching up on health outcomes. Sarwar Lateef argues for deeper governance reforms to benefit the disadvantaged. Vinayak Chatterjee laments that the PPP (public-private partnership) model died because of unrealistic asymmetric expectations between government and private developers. 

 

LISTENING TO THE “ANIMAL SPIRITS”
The voices of the intended beneficiaries from reforms — consumers and domestic suppliers — are jammed into the last segment of the book. Rama Bijapurkar caricatures the new Indian consumer, cannily devouring cheap Chinese goods and luxuriating in retail therapy, financed by the deep pocket of e-commerce start-ups. Gita Piramal points to the churn in private business league tables as illustrative of the competitive forces unleashed by reforms. Omkar Goswami adds that the concentration of business accelerated as companies sought scale economies. Services benefited disproportionately, being less constrained by the continuing hurdles in acquiring land or access to quality infrastructure. 

 

Deepak Parekh narrates how HDFC seized new opportunities in banking and insurance using its core competence in customer-friendly financial services. For Mukesh Ambani, economic reform was instrumental in fulfilling his father Dhirubhai Ambani’s dream of a global scale of operations. Kiran Mazumdar-Shaw — a first mover — lucked out. With just Rs 10,000 in her wallet, Biocon grew into a $1-billion listed company by 2004. Sunil Bharti Mittal, a spunky, first-generation entrepreneur, seized every opportunity available to establish India’s first multinational telecom company. If every second American truck has a Bharat Forge axle, Baba Kalyani has economic liberalisation to thank for it. For Narayana Murthy, liberalised import of hardware and current account convertibility alone were enough to make Infosys fly. R Gopalakrishnan recounts how storied firms, like HLL and the Tata group, also restructured and diversified. 

 

INDIA – THE QUINTESSENTIAL REFORM DEBUTANT
shy
T N Ninan describes navigating reforms in India as the impossibility of cooking an omelet without breaking the egg. Vikram Singh Mehta similarly recounts the broad consensus but only for shallow reforms in the petroleum space. Some of this reticence was because of the dharma of coalition politics. This constraint no longer exists. Will the consensus deepen now? And will it now be our time to eat?

 

Adapted from the author’s book review in Business Standard, August 17, 2017 http://www.business-standard.com/article/beyond-business/well-begun-is-half-done-117081501123_1.html

 

The Parsi who abducted Jinnah

‘Mr And Mrs Jinnah’: A Tale Of Unrequited Love And Its Aftermath

BOOK REVIEW : Reddy, Sheela. Mr and Mrs Jinnah: The Marriage that Shook India Penguin Random House India, 2017. 464 pp.

Sheela Reddy has a winner in this deftly crafted and diligently researched work on the life and times of Rattanbai Petit Jinnah. But this is not a racy read to be completed on the flight from Mumbai to Delhi. Try it only when you have the time and mindspace for it. There have been other works on the Jinnahs earlier – Khawaja Razi Haider’s Ruttie and Jinnah and Kanji Dwarkadas’s Ruttie Jinnah: The Story of a Great Friendship.

The recent release of the private papers of Padmaja Naidu provided the impetus to revisit Ruttie and her times. The author paints a broad canvas of the life and times of the commercial, professional, political and zamindari elite of the British Raj during the first three decades of the 20th century with the rumblings of guided democracy as a backdrop to profile Ruttie.

Other characters enter through the door opened by her, including Muhammad Ali Jinnah, or “J” as Ruttie called him – a relentless achiever, penniless son of a bankrupt Shia businessman in Karachi, who became the most sought-after barrister in Bombay, a multi-millionaire by the time he was 40 years old; the political leader of Indian Muslims and eventually, Quaid-e-Azam of Pakistan; austere to the point of having cold baths in freezing England and yet a dandy dresser, with an eye for fast cars and a mansion on Mount Pleasant Road, Malabar Hill.

Jinnah Gandhi

JINNAH – Macaulay’s perfect product with GANDHI – wily, veiled Macaulayputra

ruttie

RUTTIE JINNAH – THE PARSI BEAUTY WITHOUT A CAUSE

Ruttie could have passed into the pages of history unnoticed had it not been for two red lines she crossed. First, at a time when caste and religion were impregnable walls for getting married, Ruttie, a Parsi, married Jinnah, a Shia, without her parents’ approval. Even today “Love Jihad” – a Muslim man marrying a non-Muslim woman, remains socially somewhat unacceptable. But in 1918, this was unheard of. Such were the religious rigidities, that even Motilal Nehru, a contemporary, anglicised Kashmiri Pandit barrister from Allahabad, twice president of the Congress, could not stomach his daughter, Nans (later Vijay Laxmi Pandit), marrying a Muslim man she loved. He successfully moved heaven and earth to break up the romance, aided and abetted by Mahatma Gandhi.

THE PULL OF OPPOSITES

For Ruttie, to have followed her heart, without considering the consequences, was typically foolhardy but also exceptionally courageous. Second, characteristically, it was Ruttie who pursued and wooed Jinnah, a regular guest at the Petit mansion, which with its fabulous cuisine and gracious hospitality was a melting pot of high society.

“I abducted him” was Ruttie’s conclusive declaration to the judge hearing the abduction charge lodged by her father against Jinnah, once he came to know of their secret marriage according to Islamic rituals. It is easy to understand why Ruttie desired Jinnah. He was quite simply the most desirable man around, seemingly impervious to the charms of dozens of swooning society damsels, including, rumour has it, Sarojini Naidu. It was a challenge Ruttie could not ignore.

Not so obvious is why Jinnah wanted Ruttie. Salacious rumour, implausibly, insinuated that it was Ruttie’s wealth which attracted Jinnah. The author perceptively suggests that behind his mask of male invincibility lay an insecure man, craving love and affection. Ruttie, a romantic with undentable self-confidence, bravado and panache must have been the perfect blend of strength and womanly caring which Jinnah had never experienced. Their romance was short lived. From the time they got married in 1918 – when Ruttie turned 16, the cold embrace of Jinnah’s austere life began to cool the flames. It was not the age difference which mattered (Jinnah was 24 years older than her).

Jinnah had devoted himself to his work and to politics since 1898 when he first came to Bombay from Karachi. There was never any time for anything outside his professional and political ambitions. For Ruttie, life was meant to be enjoyed, travelling, meeting and making friends, partying and dancing – which Jinnah detested, interspersed with a fierce commitment to social causes and extravagant gestures defying convention, like sitting on Jinnah’s desk with her legs dangling, during business meetings.

The need to shock, to be out of the ordinary, manifested itself in unorthodox behaviour in Ruttie – refusing to courtesy to the Viceroy, instead greeting him with folded hands in the Indian way; venturing out into the Lower Bazaar in Shimla to eat chaat by the roadside, which upper class women of her time never did. Her portrait penned by Lady Reading, the wife of another Viceroy, is tellingly pointed: “Very pretty, a complete minx. She had less on in the daytime than anyone I have ever seen.” Not surprisingly, the marriage quietly unraveled.

NO PLACE FOR WOMEN LEADERS IN POLITICS

Ruttie longed to join Jinnah in his struggle against the British. On one occasion, whilst Jinnah and the Home Rule Leaguers were engaged in a fierce struggle within the Bombay Town Hall to outvote the supporters of Governor Lord Willingdon, who wanted a memorial erected to honour the governor’s services, Ruttie succumbed to her secret desire to directly engage with the massive crowd gathered outside. Climbing atop a soap box, she delivered a rousing speech which had the crowd begging for more.

Such was the tumult they created, that the Commissioner of Police arrived to disperse the crowd. She refused to leave and resolutely stood up to the water cannons which were unleashed on her and the crowd, drenching them completely. Her beauty, now clingingly displayed, her passion and her determination were much praised.

Jinnah never commented on her actions. But Ruttie understood that her place was not to lead but to sit mutely behind Jinnah in public support of him. This continues to be the role for many talented but unfortunate Indian women even today in our patriarchal, gender-biased society. Jinnah was entirely self-centred, craving attention and love, but only on his terms and at his bidding.

INDEPENDENT WOMEN AT A TIME OF INSTITUTIONALISED DEPENDENCE

The more traditional amongst modern Indian women continue to resignedly cater to it. But Ruttie never was a traditional Indian woman. She, more than any other, was what rich, Indian women from anglicised homes were being taught to become by imbibing the “enlightened” European-style education and lifestyle they were exposed to. That hers was the right way was reinforced by the examples of liberated womanhood around Ruttie. Sarojini Naidu, her key confidante and a frequent guest at the Petit Mansion, equally at ease in Gandhiji’s ashram as in Bombay high society, spent more time out of home on lecture circuits and Congress meetings than with her family in Hyderabad. But her good fortune was to find in MG Naidu the perfect, enlightened, supportive husband, gently explaining to their daughter, Padmaja, that her mother had committed to serve the nation, which thereafter became a duty she could not ignore even at the expense of spending less time with the family.

NEVER A FAMILY

A girl child was born to the Jinnahs in 1919, known today as Dina Wadia married to Neville Wadia of the illustrious Mumbai industrial family. But parenthood created no new bonds. Like the other super rich, anglicised Indians of the time, the Jinnahs outsourced care of their child to European nannies and tutors. Jinnah took no interest in her, beyond willingly paying the bills of the nannies. But that was not atypical for the times.

Why Ruttie, who seemingly adored children and lived with a menagerie of pets, took no interest in her child, remains less clear, except if examined through the lens of Ruttie’s all-consuming love for Jinnah, which left no place for any other.

Seeking a stabilising routine, Ruttie emulated her mother and diverted her creative energies into wifely duties, turning Jinnah’s mansion, South Court, into a breathtakingly beautiful home. But she was unable to cope with the loneliness of unrequited love. Jinnah was not given to expressing his emotions. On the contrary, his entire life had been a struggle to master them.

Ruttie, ostracised by the Parsi community, took refuge in dancing, the occult, Theosophy and ultimately drugs. Ironically, Motilal Nehru visited the lonely Ruttie whenever he was in Bombay. Every visit to the miserable Ruttie must have served to reassure him that he had done the right thing in saving his own daughter from crossing the communal divide. By 1928, the couple were ready to part. Jinnah chided himself for marrying a mere child.

THE END

Ruttie felt stifled by the need to keep up the charade of a hollowed-out marriage, which was devouring all aspects of her character except the role she was expected to play. “Try and remember me beloved,” she wrote to Jinnah “…. as the flower you plucked and not the flower you trod upon.” Her letter to Jinnah on separating is a damning indictment of unrequited love. “Darling, I love you. I love you – and had I loved you a little less, I might have remained with you.” Within a year of separating, Ruttie was dead – rumour has it, through an overdose of drugs. She died on her birthday – February 20 – at the age of 29.

LIVING CONTEXTUAL LIVES MATTERS

Born at the dawn of the 20th century, Ruttie exuded the confidence and exuberance of one born to lead. But her gilded life remained imitative, out of context, a parody of an alien culture, lacking in the sense of purpose or deep roots, which are the bedrock of inner peace and happiness.

Rapid urbanisation and the tech explosion in India have spawned similar incentives today to live “out of context”, “over the top” lives, in insulated, comfortable, alien bubbles. But take heed of Ruttie’s lesson – nothing which is out of context is sustainable.

Sheela Reddy’s book is a treasure trove. A must-have for your bookshelf.

Adapted from the authors BOOK REVIEW in Swarajyamag, August 3, 2017 https://swarajyamag.com/magazine/mr-and-mrs-jinnah-a-tale-of-unrequited-love-and-its-aftermath

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)?

TU

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 http://www.asianage.com/opinion/columnists/090817/hard-reforms-vital-nda-needs-to-shun-populism.html

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