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Modi@Davos – Jawboning the future

Davos

Even as Prime Minister Narendra Modi will be winging it to frosty Davos for the World Economic Forum’s annual meeting next weekend, his bete-noire — Congress president Rahul Gandhi — has decided to be different and spend the coming week in his parliamentary constituency of Amethi, in rural Uttar Pradesh. Both seek inspiration and support. But from very different sources.

A shared future less likey than a dystopian nightmare

famished

As usual, bombast is expected to rule at Davos. Consider the title of this year’s meet — “Creating a Shared Future in a Fractured World”. It completely obfuscates the fact that everything the world has done over the past 40 years has conspired to keep the majority share of the fruits of development within the elites. The rising inequality and congealing wealth at the very top is witness to the failure of the open economy model to deliver growth benefits across the population. China’s President Xi Jinping contested this proposition in his address at Davos last year. Yes, China has lifted 700 million people out of poverty — more than any other nation. But relative poverty has increased even in China.

As if this was not enough, automation and artificial intelligence shall, over the next two decades, push ever greater masses of unfortunates outside the virtuous cycle of income enrichment. This is a prime concern for India, with 60 per cent of our current population less than 31 years of age.

It doesn’t end there. Once we create this dystopian world in which the few, engaged humans work within an insulated eco-system of high tech, the large mass of humanity will be on the outside looking in. They would be fed by subsidies thrown at them. Consider that block chain if applied widely to everyday transactions can scupper the employment of auditors, accountants, lawyers and judges — all of whom earn a living out of the problem of authenticating facts. Possibly, the efficiency benefits of automation may be high enough to finance generous handouts to the losers. But it would be a sorry society surviving on aid, rather than individual effort. We know already how debilitating aid dependency is.

This model of growth is not sustainable and needs to be junked. But it is unclear what should replace it. Davos is unlikely to help in that direction. There is never time at Davos to get beyond the breaking news.

The silver lining – WEF exaggerates the fear of a fracturing world

Consider also the assertion that the world is a more fractured place today that it was a few years ago. Nothing could be further from the truth. Just last year at Davos, China, a habitual outlier, took the lead to reinforce the need for world integration. Compare this with the China of just 40 years ago — which was not even a member of the World Bank, and which joined the World Trade Organisation only in 2001. The rapid increase in the share of domestic GDP exported today is another indication that the world has shrunk, not fractured.

Show me the money

Davos is more about striking deals than philosophising about the world order. Prime Minster Modi is a consummate deal-maker. So, expect some significant commercial action at Davos. After all, Davos is not the United Nations, where nations talk at each other. It is a forum for leveraging business opportunities through public-private partnerships.

India a leader in frugal innovation

Frugal

India has already thrown its hat into the ring of frugal innovation in space technology, with our Mars mission. Davos would be a good opportunity to emphasise the peaceful development of missile technology by India — in stark and sharp contrast to China, Pakistan and North Korea.

Unparalleled deep fiscal and institutional reform

No country has taken steps, on the scale we have, to root out corruption using digital technology, banked transactions and the Goods and Services Tax. These have together negatively impacted economic growth in the short term. To be sure, there have been glitches along the way. But steadfast remedial action is delivering financial inclusion for all. This is more than just an economic revolution since it goes to the heart of culture and social practices.

Conquering terror

Mr Modi was one of the first to warn the developed world that terrorism was a hydra which strikes rich and poor alike. India has for long suffered cross-border terrorism, which seeks to incite an alternative religious reality to Indian Muslims, who are a significant minority. India’s foundations are secular.

India is quintessentially liberal and entrepreneurial.

India was a secular country even before the term “secular” was inserted, somewhat unnecessarily, into the preamble of our Constitution in 1977, during the Emergency, by then Prime Minister Indira Gandhi. Also, despite the term “socialist” having been inserted into the Constitution at the same time, India has never been a Socialist country.  Land ownership has always been personal in India. The concept of property rights is deeply embedded into our culture. The state-owned industrial monoliths — the visible outcomes of “socialism” and the entire employment in the government sector, has never exceeded around five per cent of total employment. If there is one thing India is known by it is the spirit of entrepreneurship. The government is trying to liberate “animal spirits” through light touch regulation, the rule of law and supportive infrastructure.

Can POTUS & Modi queer President Xi’s, 2017 play as “leader of the world”

POTUS

US President Donald Trump seems to have upset Prime Minister Modi’s moment at WEF. The ebullient and volatile POTUS is likely to garner all the sunshine. But Mr Modi is sure to use their joint appearance at Davos. He will fashion events and his remarks in a manner which point to a genuine partnership between the United States, Europe, Japan, Southeast Asia and India. Together, these economic actors contribute nearly two-thirds of the current world GDP. More important, they share some institutional and cultural attributes, which even by the jaded standards of today, can be called morally superior — like due regard for citizens’ rights and a commitment to enhancing the transparency with which the State functions.

Some homework may show that India walks the talk on shared growth

sharing

Davos will be a tough challenge for Prime Minister Modi. He needs a credible story to explain why growth — the holy grail of the Davos crowd — has lagged in India even as growth has picked up world-wide. It would be great if he could substantiate that while headline growth has lagged, shared growth has increased, particularly if the 116 backward districts (out of 593 total districts in the country), identified by NITI Aayog have, contributed more than their share in GDP to growth.

That, after all, is the growth model the World Economic Forum is looking for.

Adapted from the author’s opinion piece in The Asian Age January 13, 2018 http://www.asianage.com/opinion/oped/130118/modidavos-a-new-kind-of-challenge.html

Xi and Modi – joined at the hip

xi-jinping

Prime Minister Modi and scores of democratically elected leaders, must envy Xi Jinping the President and “uncrowned emperor” of China. The serried rows of compliant and attentive members of the People’s Congress, seated, as if pinned, to identical red upholstery; displaying endless patience through Xi’s three and a half hour over-long, speech, without once dozing off or interrupting with a “point of order”. All this must seem like a dream to our leaders, used as they are, to rambunctious legislatures, more eager to speak- often all together – than to listen.

China shines

china2

Clearly, China has something to be chuffed about. Its model of socialism with “Chinese characteristics” cut away the romantic nonsense of socialist collectivism and recognizes that private enterprise and (less strongly) markets, create wealth, rather than good intentioned, tight, public-sector management. By combining private enterprise with a strong government and political stability, the Chinese model borrows the best from different ideologies. China gets an A for creating national wealth and for distributing it – poverty was down to just 2 percent in 2014 versus 21.2 percent in India (per World Bank definition $1.9 PPP (2011) per person per day).

But a more benign social policy beckons 

dissent

But the jury is out on whether an authoritarian State can nurture citizen centric growth. How long can the iron hand of the Chinese Communist Party (CCP) continue to rule China absolutely? Will the Chinese middle class not replicate the autonomy and democracy movement of Hong Kong? These are current concerns. This much is evident, from the new Xi doctrine, spelt out on October 18 in Beijing, which espouses that the CCP must provide for the “happiness” of citizens;  remain closely in touch with their aspirations and monitor citizens perceptions better.

Bhutan: Democratising for happiness

king

China’s tiny, neighbor, Bhutan could teach China a lesson or two on whether “happiness” mixes well with absolutism. King Jigme Singye Wangchuck voluntarily abdicated in 2006, in the hope, that this would help Bhutan evolve into a modern, egalitarian, democratic country, whilst retaining its trade mark of happiness. The Bhutan constitutional monarchy is revered, like the British monarchy, which is widely respected and admired.

Wealth alone does not breed content

The Chinese quest for a prosperous, satisfied and happy populace living under the hegemony and parental control of the CCP, is self-defeating. The spirit of liberty and competition is not divisible. A market led economy cannot be sustained under monopolized political power. Where markets rule, they drive the political process. Where the State rules it drives business. Innovation does not thrive in eco-systems, where the freedom of thought is absent. China is much admired as the factory of the world. But it has grown because worker rights do not exist, access to legal rights is limited and public interest is expected to mirror the CCPs interest.

India and China: different strokes

Unlike China, India is determinedly heterogenous and multi-party. It lends itself to decentralized, democratic governance. It is tempting to infer, therefore, that India illustrates the value of democracy even in a poor, developing country.  The recent Pew survey showed that 85 percent of Indians trust the government, even though, 40 percent of the population is vulnerable to poverty; governments have been negligent in providing public services and human development indicators are worse than in sub-Saharan Africa. But, disturbingly, the very same Pew Survey also shows that 55 percent of citizens are comfortable with a more autocratic, “strong” government.

Nationalism rules

This swing towards authoritarian governments is not isolated to India. It is an international trend in reaction to the economic limitations of the open economy, liberal, democratic model for development, particularly with respect to containing growing inequality. It is not surprising, therefore, that President Xi Jinping should advise developing countries to look closely at the Chinese model, which comes with dollops of loan assistance, as an alternative to the more standard western model of development, advocated by the Multilateral Financial Institutions.

The country cousins meet

Xi and Modi

Prime Minister Modi was not just sharing dhoklas with President Xi in Ahmedabad way back in September 2014. There seems to have been a meeting of minds there. Like Modi’s vision of modernity, rooted in tradition, the Xi doctrine, also evokes the five thousand old civilization of China. Both leaders focus heavily on external and domestic threats to security. Both advocate much stronger oversight of the media, the internet and educational institutions, to regulate disruptive dissent. Like Xi, Prime Minister Modi has used the first three years to implement structural reforms. His high decibel war on corruption is expected to minimize the financial “fire power” of the mafia; bridle political opposition and improve public sector outcomes. Implementation of the long-delayed Goods and Services tax (GST) shall, like Bollywood, bind us more tightly and provide incentives to integrate further. Regions which are seamlessly connected for commerce tend to remain together. Like Xi, Modi views infrastructure as a “glue”. For Xi it is a glue to foster Chinese hegemony over its near abroad. For Modi it is a “glue” to bind the nation.

The Xi doctrine seeks to realize the ”China Dream” – a vision of a prosperous, environmentally clean country at the center of the world, contributing positively to mankind, by 2049 – the centenary of the founding of the Republic of China. There will be much to learn from China. There are two immediate take-aways. First, that it is futile to copy the political systems of other countries mindlessly. Second, that even authoritarian governments need to listen to the people.

lagislature

Indira Gandhi, turned away from absolutism and towards democracy, in 1977, by choosing to call for elections. This ended the two-year old national emergency. She gained personally and politically from this astute move. But it took an entire decade, till 1991, for the democratic apparatus to be used effectively, in public interest. We have not looked back since. India’s political architecture is finely tuned to the risk averse nature of its citizens. It charts the middle path to progress and shuns extreme options.

China will do well to study this option closely, as it seeks to move center stage in world affairs and looks for domestic pathways, to transform from being a single minded, ruthlessly efficient, economic, power-house to a house, fostering happy Chinese.

Also available at https://blogs.timesofindia.indiatimes.com/opinion-india/xi-and-modi-joined-at-the-hip/

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