governance, political economy, institutional development and economic regulation

Posts tagged ‘Africa’

Getting nationalism right

nationalism

If the term nationalism and the sight of the national flag generates a warm, comforting feeling in your heart, your government is doing a great job. If, however, this term and the flag, leaves you cold, clammy and resentful, there is something the government is not doing right.

Nationalism – an abstract construct – acquires a real dimension on rare occasions, like when you need visas to travel; or if you lose your passport whilst abroad; deciding whom to root for in international cricket; when a hate crime is reported against an Indian citizen; when P.V. Sindhu shines in badminton; when a stranger turns to you for help with her mobile, assuming all Indians are techies or when a cortege trundles, past draped with the national flag.

In comparison, ethnic, religious, professional, social or economic ties are more immediate and experienced daily. Should it be otherwise?

Nationalism versus globalization

Till recently, nationalism was a waning concept, marginalized by the increasingly interconnectedness of the world. The two decades post 1990, saw the world became unipolar; international trade boomed; the threat of wars receded – except in a few fragile regions. Poets dreamed, and the world seemed united, in solving the collective action problem of global warming.

Nationalism, it appeared, had bowed down to globalization and become just a set of civic duties and rights for citizens – a sub-set of broader rules governing the entire planet. High border walls, to keep citizen from escaping abroad or stopping those wanting to get in, became an aberration. Foreigners eager to become citizens became a metric of a country’s success and in the United States, the reason for it.

India appeared well placed to walk the talk. Our constitution is an enabler to pursue globalization. Our history places us at an advantage. We are no strangers to foreigners settling permanently in India. Foreigners ruled India for seven hundred years prior to 1947 and were assimilated into the mainstream. India did not come ready-made in 1947. It has been built, since then, using a mix of persuasion, pressure and perquisites. Parts of the North East, which had remained restive, have now joined the national mainstream, driven by the pervasive influence of Bollywood, domestic economic migration and adaptive political alignments. The valley of Kashmir however remains an outlier.

Drivers for sustained nationalism

The best glue for national integration is the perception that every citizen and every region is getting more from the nation than they are giving back. A positive balance, for every individual and every region is possible because in economics one plus one is more than two. Collective decisions create opportunities for adding net value, which do not exist if individuals were to decide separately. Managing climate change – a negative externality – and the beneficial scale effect from integrated markets – a positive externality – are both examples of the benefits from collective action.

Nations with complementarities should stick together. Sadly, they often don’t because of political noise or perceptions of inequity. Consider that our trade with South Asia is abysmally low. Imports are less than 1 percent and exports 7 percent of our total imports/exports. But India is not alone in such errant political behavior. Brexit happened because Britons felt, or were made to believe, they were giving more to the European Union than they were getting from it.

Inequity and discrimination – a leading cause for nations breaking up

bangladesh

Nations can splinter if systematic inequity persists and not enough is done to address the problem proactively. The creation of Bangladesh in 1971 is one such example. Pakistan managed its province of East Pakistan (previously part of Bengal) on an extractive basis, like the colonial masters prior to independence in 1947. It did not help that the new colonial masters were heavy handed, often brutally repressive fellow Muslims from Pakistan who ignored the deep Bengali cultural roots of the region. A perception of inequity fed on the fact of cultural differences and significant economic disparity between the two regions.

In comparison, India has been better at managing actual and perceived inequity at the regional or provincial level. Quotas for recruitment of tribes into the civil services have benefited the North East areas. Special benefits built into the scheme for devolution of central grants and share in union taxes, make additional resources available in tribal areas for infrastructure development. Caste, in Hindu majority India, is a significant driver of inequity. But quotas in government jobs and special schemes for livelihoods for the lowest and mid-level backward castes have levelled the field somewhat.

Embedding liberal, democratic principles in nationalism is tough

MK Stalin 2

Democracy breeds contestation. Tamil Nadu is the economic and cultural powerhouse of South India.Tamil, claims to be older than even Sanskrit,  With firebrand DMK leader, M. K. Stalin annointed to succeed strongman M. Karunanidhi; intense infighting in the ADMK after Amma and film star Rajnikanth exploring political waters, expect populism and rhetoric to prevail. A favourite ploy is to play victim and seek special status for a pan-Dravidar region, comprising the six southern states (including Puducherry). The cone of south Indian states comprises 21 percent of the population with an outsized share of 29 percent in national GDP and higher than average social indicators. Industrialized southern states benefit from access to the markets of the less industrialized northern, central and eastern India. The underdeveloped hinterland is a source for cheap, unskilled, migrant labour and a market to absorb skilled southern migrant workers.

Liberal Democracy is under stress internationally. Nationalism, conflated with authoritarian, even whimsical rule from the top, is on the ascendant. President Trump’s America First is the most distressing example, because it is a betrayal of existing international compacts. Russia, under President Putin remains whimsically self-centered. China, backed by recent economic success and the ascendancy of “Emperor” Xi, represents the most troublingly compelling, muscularly proselytizing, alternative to the liberal, democratic model of nationalism.

Partnerships, across nations, can secure the liberal, democratic order

In this dystopic, political landscape, ageing Europe and Japan emerge as beacons of liberal democracy.  Partnerships with them and select countries in Sub Saharan Africa and the Asia-Pacific can provide demographic and market dividends whilst fostering our common political and civic values, rooted in the Magna Carta.

Also available at TOI blogs March 30, 2018 https://blogs.timesofindia.indiatimes.com/opinion-india/getting-nationalism-right/

 

Exports – India’s Achilles heel

children airplane

Before the world became flat in 1990 — to borrow the title of Thomas Friedman’s 2004 book on globalisation — developing countries were locked into twin traps of low access to foreign currency and low levels of domestic savings. India’s anxiety about foreign exchange, to fund imports, goes back to those desperate times when export pessimism was rampant and import compression all the rage.

Externally strong but domestic trip-wires aplenty

India has come a long way since then. Standard and Poor’s, the international rating agency (November 24, 2017 rating action), considers India’s external position to be the strongest aspect of its aggregate credit profile. Foreign exchange reserves are more than a year’s imports; external debt levels are modest at around 20 per cent of GDP and the foreign exchange gap between earnings from exports and remittances and the outflow on imports has narrowed to less than one per cent of GDP (2016-17). This is a tribute to India’s prudent external account managers.

Export of goods key laggard

Indian goods exports (excluding services) are 12 per cent of the national income. Manufactured goods (including textiles, clothes and gems) have a share of 76 per cent; minerals and agricultural products account for around 12 per cent. Petroleum products account for the remaining 12 per cent. The dissatisfaction has been with the trend value of exports. Over the last three years, this has lagged GDP growth significantly. The Trade Policy (2015-20) target of increasing our share in world trade from 1.5 to 3.5 per cent is unlikely to be realized anytime soon.

The world in the slow lane is unhelpful

 

This was never an easy target. World growth is yet to recover from the slowdown. Protectionist barriers, related to the loss of domestic employment and increasing inequality, are finding favour, including in our largest trade partner: the United States. In this unsupportive ecosystem, increasing our share of world trade pie needs a calibrated strategy to target markets and product lines where Indian goods are most competitive. Five initiatives can be considered.

Focus on niche markets, South Asia & Africa

Expanding bilateral trade within South Asia and with Africa should be the first order of business. Some trade is already round tripped via the Gulf, adding intermediary margins, which are denied to both the original exporter and final importer. Trade relationships tie regions together. The Indian Ocean littoral needs targeted attention via specific product chains.

Higher agri exports protect jobs

Primary products, particularly agricultural goods, were overweight in our export basket in the 1980s. Their share has shrunk post liberalisation. Legalising commercial leasing of large tracts of land for farming can revive agricultural production for export markets and protect domestic jobs.

Regional air connectivity initiative can bring export markets closer

The recently-launched progressive policy of regional air connectivity offers an opportunity for embedding export orientation even in hitherto inland, poorly connected locations. Air connectivity adds value to the local economy by kickstarting business around newly-serviced airports which are logistic nodes, connected to hubs in metros.

Long on diversity but short on volume

The Economic Survey 2017 notes that India exports a wide range of products. We export 97 per cent of the top 100 items traded worldwide at the four-digit nomenclature level and 83 per cent at the six-digit nomenclature levels. But the volumes exported are low, at just 1.6 per cent of the total value of world exports.

Joined up policy formulation and implementation needed- Committee for Investment and Trade (CIT)

Prabhu Modi

Exports need to be supported by a trade policy developed collaboratively with state governments. The Goods and Services Tax committee provides a role model. A similar federal trade and foreign investment committee, with all state governments on board, could provide a structure for joint policy formulation and implementation. Consider that meat exports have declined as state governments failed to sanction goons extracting “rents” from the movement of cattle — other than even cows — for slaughter. This also imposed a direct loss in domestic income of $1 billion — small beer, perhaps, in the larger scheme of things. But unnecessarily disruptive for one million people employed in the leather, dairy and meat industry. Significantly larger income loss is inevitable if the 40 million rural households who keep milch animals for boosting nutrition and for profit are dissuaded from doing so.

Link devolution to export effort – 15th Finance Commission

State governments lack incentives to promote exports. The recently constituted 15th Finance Commission could help by tweaking the fiscal devolution to include export effort as a carrot for enhanced devolution. Direct incentives are more empowering for states than Union government-funded schemes. Landlocked states, which have fewer options for exports than seaboard states, could be incentivised for narrowing the gap between themselves and the exports to GDP ratio at the national level.

Realistic exchange rate for ending the incentive to import and push exports

India has, perversely, become a world leader in initiating action under anti-dumping measures. In 2016, out of a total of 145 actions by all countries, India initiated as many as 69 actions. Maybe, if we were to fix the rupee exchange rate more realistically, so many anti-dumping actions may not be needed. Domestic producers are already hurting from the turbulence, admittedly temporary, from the recent tax reforms. But they also remain handicapped by an appreciated rupee. A “strong” rupee is bad for exports. It is also bad for domestic producers, since it makes imported goods artificially cheaper.

We are not the US – capital flows to plug the trade gap is not sustainable

Prudent management of the external account has chuffed investor confidence so much that surging capital inflows (other than debt) have obscured the desperate need to enhance exports to plug the foreign exchange gap, emanating from the trade imbalance.

Watch the oil price closer than your enemy

We have benefited from the continued low prices for imported oil by around $50 billion. But our inflows, via remittances from Indians working in the Gulf and elsewhere, have suffered a collateral damage of $10 billion. The net effect is a benefit of $40 billion.

But betting on oil prices is worse that betting on the monsoon being on time. Our dependence on imported oil, to fuel growth, shall continue, till solar power becomes the primary fuel for transportation. But that future is at least a decade or more away, even in developed economies. In the near term, we must make our trade balance resilient to the possibility of an oil price increase.

agri india

Exports, economic growth and good jobs are organically linked. We are ahead on growth. But the two other legs also need to catch up.

Adapted from the authors opinion piece in The Asian Age, November 29, 2017 http://www.asianage.com/opinion/columnists/291117/will-exports-remain-indias-achilles-heel.html

Afro-India: claiming the 21st century

Shared Dreams, Shared Destiny” screams the banner welcoming African delegates to the Third Indo-Africa Forum Summit. Forty heads of state are in attendance, along with dozens of ministers and 2,000 officials. Day one, Monday, got off to a shaky start. The press meet was termed a “damp squib” by one leading financial daily. Most delegations were absent disappointing the media which had to make do with our impeccably spoken minister Nirmala Sitharaman and her team of high officials.

nirmala-sitharaman

Pre summit conference on trade with Minister Sitharaman

A 7.5 scale earthquake, shook Delhi in the afternoon but caused no damage. Hopefully the visiting “big men” and the solitary “big woman” — President Ellen Johnson Sirleaf of Liberia — will remember the demonstrated resilience of Indian construction, whilst deciding whether or not to go for a cut-price bid from China for their next project.

Day two had great press for Union minister for external affairs Sushma Swaraj, in a bright orange sari, with swathes of delegates draped around her.

swaraj2

Minister Swaraj has these big men eating out of her hands

Why South Sudan, which has more cows than people, sought help from India to improve its meat supply business, remains a mystery. It illustrates how limited is Africa’s association with India.

Fuzzy agenda

Unfortunately, the government remains woolly on what we want to do with Africa beyond importing their raw materials and exporting cheap machinery, cars, chemicals and pharmaceuticals to them. Indian business is way ahead of this strategy. It sees Africa as a popular investment destination given the ease of doing business there at higher margins. Siuth African President Jacob Zuma has already sounded the battle cry of “Make in South Africa”.

Doing Business Report pats Indian on the back

Fifteen countries, or one-third of the 49 African countries, with a 30 per cent share in Africa’s GDP, monitored by the World Bank’s Doing Business Report, rank higher than India. Mauritius leads the pack at rank 32 — ahead of Japan and Italy, followed by economic powerhouse South Africa and tiny Rwanda, which weathered its 1990s ethnic crisis spectacularly.

India ranks a low 130 despite frantic efforts to improve its rank from 142 last year. Of the African economies which rank lower, 50 per cent or 15 countries are classified as “fragile”. African governments are well ahead of us in the art of outreach to attract investment or doing international business.

kant

Amitabh Kant the “go to” man for branding India

India’s democracy- only for marathon runners

Our next big “selling point”, from the Western perspective, is the democratic architecture of our country and its resilience since Independence in 1947. To be sure, there is much to be proud of. But it is doubtful if any of Africa’s “big men” and the solitary “big woman” will be attracted to our fractious democracy. Africans prefer order and discipline like a lot of Indians. They willingly barter personal liberties and freedom for the sake of their communities. Tribal bonds are alive and vigorous in Africa, much as caste is the leitmotif of India. The unhappy outcome of the Arab Spring, which unduly empowered citizen groups against the state, endorsed their strategy to retain an intrusive state to maintain order.

India is too big, too diverse, too individualistic and too “argumentative” for heavy-handed State regulation. Possibly, Africa could need a federative, “soft State” strategy, should they one day decide to form the United States of Africa. But for the present, we have few lessons for Africa on how to run a government. Why then, have so many top decision makers bothered to come? Here are my thoughts:

Is the new India for real?

First, Prime Minister Narendra Modi’s muscular outreach to the world has evoked intense curiosity. Foreigners are lining up to check if we are ready to walk the talk. Does reality match the hype? It helps that India has a global reputation for gorgeous shopping — the jewelry, the silks, the pashmina, the prêt-à-porter fashion wear, all available at competitive prices, not to mention the grandeur of Mughal and colonial India reflected in the many monuments in Delhi which are stunning to gawk at.

gawk

Jugaad and the very visible hand of God

Second, is curiosity, about an ancient land that is reputed to be managed directly by God, because doing so is beyond earthly skills. India is full of bad news, rapes, riots, hunger, poverty, illiteracy and poor services. And yet, it is the fastest growing economy in the world with a reasonable ambition of joining the “big three” or “the big five” over the next 10 years. Bung in the fact that government is hopeless at providing primary education, but arranges the kumbh mela (religious festival) annually at the Sangam in Allahabad for 100 million pilgrims over the space of a week, without a major disruption or incident and the role of divine intervention in keeping India going becomes clear.

durga

We produce the full range of products from leather jootis to spacecraft which hover around Mars, with consumer durables, textiles, chemicals, pharmaceuticals, intermediate goods and industrial machinery also thrown in — not to forget the services provided globally by our IT companies. Yet 60 per cent of our people live below the $2 per day poverty line; just 3.2 per cent of Indians (middle class and above) own 64 per cent of the country’s wealth (Credit Suisse 2015). How we manage these contradictions, the “social noise” and the “political disruptions” is a miracle that many feel they need to “touch” to understand. And so they come.

Come, make friends in India

Lastly, and most importantly, heads of state come to India to build lasting relationships with a country which is non-threatening, well-meaning, gentle — at least by the standards of international realpolitik — and is slated to have a share of 10 per cent of the incremental world GDP by 2025 and 15 per cent by 2035.

Uhuru

Prime Minister Modi meets President Uhuru Kenyatta of Kenya

Selling products and arranging capital is what our private sector should be doing, not the government. After all, business is best placed to strike deals on both sides of the table. What our government needs to do is to paint in the details of the “Idea of India”, projected by Prime Minister Modi, as a focused, motivated country determined to claim, along with other developing countries, the second half of the 21st century as “our” own.

The Africans cannot be bowled over by pomp or ceremony. For them a Mercedes is merely a high-end taxi, not an executive limousine. What attracts them, instead, is the simplicity of life in India, the concern for high human values, even amongst our poor, combined with our earthy tradition of seeking “value for money” — well-known to them via our Gujarati expatriates. But if this fails to click, dancing to Congolese Rumba or the fusion Afrobeat also helps. Pity there is no joint Nolly-Bollywood event planned.

rashtrapati

Rashtrapati Bhawan, New Delhi illuminated for the Diwali festival

Adapted from an article by the author in Asian Age October 29, 2015 http://www.asianage.com/columnists/afro-india-claiming-21st-century-722

Only credible leaders can skill the youth

Barefoot college

Photo: A skilling leader from Bunker Roy’s Barefoot College, Tilonia, Rajasthan- an international training center in solar engineering for the illiterate. Photo credit: The Guardian,

The appointment of the president of the Film and Television Institute of India (FTII), Pune, is taking on the epic dimensions of Satyajit Ray’s Ganashatru.

Gajendra Chauhan, the new president, is no enemy of the people. But the students seem to be right in resisting the government’s attempt to foist a minor film personality on them. Compared to past presidents, the present appointee is a wafer-weight.

India produces around 1,600 films annually, which gross $2 billion on 2.6 billion tickets sold. Other revenues are additional. The nexus between undeclared wealth, films, drugs and over-the-top living is tighter than a two-person lift crammed with six. Despite the sleaze, visual media and entertainment is where the world is headed. We should join the race to the top.

Instead we are stuck in Byzantine power struggles — between students and the government in the FTII; between management and the government in Nalanda University and recently in IIT-Delhi. Why these autonomous trusts and institutions are micro-managed by the government is a mystery — one of many in the inscrutable world of the Indian public sector.

The Nalanda University is an innovative public-private partnership. It created breaking news recently, not for its academic standards, but because the celebrated academic and Nobel Laureate Amartya Sen went public, that he was nudged to resign from the post of chancellor and chair of the governing council, thereby drawing attention to the pervasive power of the government to manage public institutions by proxy.

How should Chauhan and Dr Sen have behaved in the public interest?

Chauhan should have recused himself in the face of the student protests. If he feels the agitation lacks depth or is politically motivated, he could offer to conduct a referendum amongst the students, a la Alexis Tsipras in Greece, to prove his support.

Dr Sen’s public criticism, albeit carefully evidenced, of the “Gujarat model of development” — closely linked to Prime Minister Narendra Modi’s prowess — was sufficient to put the new governments back up. But he didn’t stop at data. He followed up with a weaker and more political attempt to tarnish the government’s credentials.

He publicly and pointedly rejected the parallel drawn by Narayana Murthy of Infosys between, the 1984 anti-Sikh riots and the 2002 “Godhra” anti-Muslim riots, as the consequence of misguided abdication of responsibility by political parties in power. By seeking to instead distinguish between the two horrors, Dr Sen wore his Congress affiliations on his sleeve.

In the event, the right thing for him would have been to resign from Nalanda on the grounds that it was against his conscience to work with a government he despises. By not doing so, he weakened his moral stand.

The last thing Mr Modi needs is disquiet in the higher echelons of the skilling establishments. The demand for skilling for employment is estimated at 425 million people over seven years till 2022. The available capacity is only seven million. India has a network of around 14,000 technical training institutes. What it does not have is a network of 100,000 leadership level professionals trained to manage this massive effort.

Existing initiatives in that direction seem disoriented. Why should one need a university for skilling — reported as one of the intermediate steps the government intends to take? Training trainers is the easy part. The really hard part is to link each training establishment to its natural market for skills with an eye on outcomes (employment) not outputs (the number trained).

The private sector can best fill the skilling gap. The information technology industry did this to grow and continues to do. Old economy companies in steel, cement, chemicals, engineering and construction are less willing to fund this public good. They complain that trained employees leave for better opportunities and skilling becomes a never-ending drain on company resources.

Old economy manufacturing is struggling under the twin challenges of squeezed margins due to domestic and imported competition and the large-scale migration of skilled workers overseas.

Mr Modi has astutely adopted this challenge as an opportunity. His proposal is for India to become the workforce supplier of the world. Presumably the idea is that the swelling inward remittances — $80 billion and counting — from overseas Indian workers is adequate compensation versus the cost of publicly funding the skilling effort.

Skilling is a public good but with strong private good characteristics. Displacement of worker skills from one company to another is not a net loss to the industry but an inter-company transfer. One company’s loss is another’s gain. Skilling costs should be borne by the respective industry associations — Confederation of Indian Industry, Federation of Indian Chambers of Commerce and Industry and Associated Chambers of Commerce and Industry of India — from funds created for the purpose based on member subscriptions and donations.

But there is also a case for partial public funding. Worker skills transferred by migration to a foreign economy are a net loss for Indian industry but helps the country’s external finances via remittances.

This justifies some public funding also for skilling.

The elephant in the room is not the amount of money to be spent nor the number of skilling opportunities. These are manageable with good leadership. What is more difficult is getting the maximum bang for the buck. Spend on skilling should result in people getting employment.

The option to encourage workers to migrate flies against the wind. Borders are increasingly closing to migration as the world economy winds down. Labour shortage in the developed world can be envisaged in future. But for every job available there will be 10 applicants from developing countries in queue. Add to that the fact that workers from compatible cultures and those who speak the language fit better and Africa will have a head start on India.

No, the real elephant in the room is that there are not enough jobs available for skilled workers in India. The desire to become highly skilled wanes if one is to subsequently while-away the hours at nukkads (street corners) scanning the “wanted” advertisements.

Adapted from an article by the author in Asian Age July 20, 2015: http://www.asianage.com/columnists/skilling-gap-252

The writer is adviser, Observer Research Foundation

BJP, take five!

BJP

(photo credit: archives.financialexpress.com)

Delhi Assembly election 2015 is beginning to resemble a Greek tragedy for the Bharatiya Janata Party. What a change from the national elections in May 2014 when the BJP shone in comparison to the inept Congress Party. The motley crew of small regional or local parties (like the Aam Aadmi Party) also could not measure up to the exhilaration created by Prime Minister Narendra Modi who seemed capable of moving the nation, if not the Earth itself, so long as he was given a long enough lever to do so. The people responded positively in ample measure.

But charismatic, centralised leadership, like Mr Modi’s today and Mrs Indira Gandhi’s earlier, whilst a huge advantage in national elections, cannot single handedly carry a local election. Delhi is likely to make this point to leaders yet again.

It is highly unlikely that the BJP will get a majority when the votes are counted on February 10, 2015.

Why did the BJP juggernaut fail in Delhi? Here are five reasons, which are also lessons for the future:

First, there is no substitute for an empowered, decentralised leadership in state-level elections. National parties are, by their very nature, highly centralised. This is why their only option is continuous micro-management by a central election committee. In the instant case of the BJP in Delhi, this was left till too late. The media blitz, the frenetic campaigning, the Cabinet ministers unleashed in end January to make up for inept local leadership, all reinforced the general impression of panic at the BJP high table and a crass attempt at wooing the voter purely for electoral gain.

Second, never underestimate your opponent. The BJP, which has a very thin leadership, got completely engrossed in its grand project of governing India and forgot that local votes have to won locally. The fact that the BJP won all the Lok Sabha seats in Delhi by hanging onto Mr Modi’s coat tails should not have induced the lethargy it did.

In comparison, Arvind Kejriwal never let his guard down. He also had the advantage that the AAP got purged of interlopers, self-servers and free-lunchers; all of whom left it when its prospects seemed dim, post May 2014 debacle in the Lok Sabha elections.

Lean and hungry, core AAP supporters kept up the leg work amongst the voters.  They refined their agenda to suit the Muslims, Christians and disenchanted Congress supporters and carried their message door to door. India loves a fakir (ascetic) and Muffler King Kejriwal resembles one, even from the tinted window of his new Toyota Innova.

Third, performance matters. The BJP’s biggest handicap in Delhi is the non-performance of the Union Territory’s three municipal corporations ruled by it. These entities are dens of corruption and completely erode the national image of the BJP as being relatively above corruption. Prime Minister Modi came to power on the performance plank. But the sordid reality in these three local bodies did not change, not even in the last nine months of direct management by the Union government, significantly diluting the BJP promise of good governance.

Fourth, stopping petty corruption yields high dividends. The instant “governance reform”, to the relief of Delhi’s “underbelly” (street hawkers, small shopkeepers, auto drivers, casual workers, petty contractors), during the 49 days of the AAP government meant the complete stoppage of harassment by the police and municipal corporations. Once Mr Kejriwal resigned and governance devolved upwards to the Union government, petty corruption returned in full force. This reinforces the impression that Mr Modi’s extraordinary executive capacity and expansive aspirations for India are not reflected in the rest of the leadership of the BJP.

In comparison, the AAP got “tempered” in defeat. They humbly accept that they erred in resigning. They appear more politically savvy. They kept up their strategy of ground-level contact and are hungry for power. The belief is strong that an AAP government will enforce “freedom from petty corruption”.

Fifth, Delhi is a city of “winners” and winners do not take kindly to subaltern rule. Delhi has the highest per capita income in the country. Its public services are both highly subsidised and of superior quality than elsewhere. It is not surprising, therefore, that it has been a “destination city” for the last two decades. Delhi comprises people who have self-selected themselves as “winners”: by entering government service through an exactingly competitive process; migrating from the surrounding areas with “fire in their belly” to earn a better life and small and medium scale business people in tourism, hospitality, IT and exports. These are highly entrepreneurial people and expect to see the same quality in their leader.

Mumbai is no different. Maharashtra’s chief minister Devendra Fadnavis is so conscious of his relative youth (he is 44) and inexperience that he takes every opportunity to dispel the notion that he is just a shoo-in of Prime Minister Modis. He needs to do that if he is to govern the proud Maharashtrians credibly.

In Kiran Bedi, the BJP had an independent, high profile, outspoken candidate for chief minister. But she was muzzled and has looked progressively more forlorn since her nomination on January 15. Gone is the assertive confidence. The Bedi baan (arrow) has been tamed into a submissive, humble “subaltern”, basking only in the reflected glory of the Prime Minister. Not quite what she has been thus far.

In the change from being a leader to becoming a dutiful subordinate, Ms Bedi lost her edge to inspire. She now closely resembles any of the many “subaltern” leaders of the Congress, none of whom are encouraged to have an identity larger than the party. She is likely to suffer the same fate. She will have to wait for the tide to raise the BJP boat again before she can have a go at political power, most likely at the national level.

Finally, is the BJP’s likely poor show in Delhi a harbinger of what will happen in Bihar? Nitesh Kumar’s Janata Dal (U) would do well to bear in mind the lessons from Delhi’s elections.

The BJP is today India’s only real national party. Fighting the “Gir Lion” needs more than development statistics and caste calculations. Time to put the JD(U) boots on the ground to5work.

Reposted from the Asian Age February 6, 2014 <http://www.asianage.com/columnists/bjp-take-five-497&gt;

Mega-cities are inhuman

Unlike monkeys, it is not in the nature of humans to huddle though we take to cuddling quite easily. The instinct to explore new frontiers and the excessive demands which we impose on natural resources; both push us to put space between each other. The ancestors of today’s Indians trekked all the way from Africa to the sub-continent around 500,000 years ago, possibly to put space between themselves and their African cousins. It is not for nothing that the self- sufficient, “Marlboro Man” was an icon for three decades starting from the 1960s albeit now discredited in a tobacco-less World.

monkeys huddling

There already are too many humans at 7 billion. Of these, 1.2 billion souls are concentrated in India, making us the most densely populated, large country in the World. Worse Indians are huddled in habitations in just 9% of the land available. The rest is forests (an implausible 23% in government data), private groves, pastures and agricultural land.

Humans huddle in cities more out of necessity than choice. Group living does not come naturally to humans, unlike lions, elephants, antelopes and penguins. The Swedish alternative lifestyle experiments in the 1960s, demonstrated that whilst cuddling was definitely in, huddling was out. Commune members tended to pair off, even if temporarily. More evidence on human choice is available from the preferences of the rich, who sprawl in gardens, whilst the poor are crammed into tiny, multiple stories precariously piled on houses.

Babus, in India, are willing to serve the government, even without pay, for the privilege of living in Lutyen’s green, heritage, garden city. The nouveau rich meanwhile are busy buying up unauthorized, “farm houses” in Delhi suburbia. Part of the fascination of “going West”, particularly to the US, is the affordability of sprawling houses as compared to the tight, modular, frightfully expensive “paper” abodes of the Japanese.

Neither time not technology, augur well for huddling or cuddling. Thanks to digitization of information; the internet and social media, human relationships are now virtual and often best conducted remotely. Many a face to face encounter has spelled disaster. Business is also increasingly digital and even government is going that way. All of this reduces the need for huddling in cities. The modern “Morlboro Man” is a woman with her Iphone.

Gandhiji’s vision of “self-sufficient” villages and Julius Nyrere’s vision of “Ujama villages”, on which the Washington Consensus smart set poured scorn, now increasingly seems not only a reality but a potential option for preserving the best of humanism. Consider that with the revolution in printing technology, it is already possible to print out a plastic tumbler or bowl in one’s home. Consumer durables are most likely to follow suit. This will completely change the “scale economy” for manufactured goods. The most scalable part of the new technology would be the software, which in all probability may have been conceived in a garage! Of course we would still need some “old industry” type factories to make the chips, the computer accessories and most importantly the printer, which makes all this possible.

Old age technology and industrial habits have fueled the international trend in urbanization towards mega cities (population of 10 million and above) whose number increased from 2 (Tokyo and Rome) in 1970 to 28 in 2013 and will likely go to 37 by 2025. India today has 3 mega cities and Mumbai is the second most densely populated megacity after Dhaka. The demise of the mega huddle of a mega city is not immediately imminent because the available “industrial age” technology still makes them scale efficient. But in India recent data indicates that growth in the mega cities is slower than in second rung cities which shows that they have reached the economic limits of their efficiency.

Mega cities are bad news for the following four reasons.

First, humans are bad huddlers because with the existing technology, cities with a density in excess of 4000 persons per sq km, end up severely polluting the air, land and water. Our mega cities have a density of around 12,000 persons per sq km and are unsustainable, as are China’s.

Second, as population density increases, the pressure on land drives up the price of realty, making “land intensive” business like “international scale multi-brand retail” uneconomic. Contrary to popular criticism, the AAP knows that no international multi brander would want to locate in Delhi because land is too expensive and hence had no downside in siding with the populist naysayers.

Third, increasing population density requires a higher spend on environmental mitigation of local pollution further driving up the cost of doing business.

Fourth urban led growth is inherently iniquitous. It creates pockets of luxury amidst vast swathes of wretchedness. The IMF (the bastion of the erstwhile Washington Consensus) estimates that in the US, 90% of the incremental wealth from growth benefits just 1% of the population.  Inequality is a growing concern and a key driver of political and social instability and crime and a major threat for poorly governed countries.

The term SMART city is the current buzzword to make cities efficient. This is a misnomer since cities by definition are not SMART. SMART is to digitize; connect electronically; disperse population; integrate rural and urban areas seamlessly and not to huddle.

Our cities should be self-financing and not draw on central or state funds. Public spending on infrastructure should focus on making rural areas more productive. It should improve the quality of life for rural residents since dispersed habitations make market based solutions for basic services unviable. At the best of times, making sensible public investment is tough. It becomes unconscionable when public funds are used to artificially drive up the demand for realty through public expenditure on creating cities. This growth pattern has also been a key source of corruption with elite capture of the land just prior to its development into an urban area using State finance.

The US is the best example of publicly funded investment in highways since the 1950s. However, even they found it difficult to do so efficiently. They also have bridges to nowhere. The recent publicly financed programs of demand creation since 2008 have been downright wasteful. California, for example, is persistently broke because it is wedded to “big government”. Publicly funded research and infrastructure can only be attempted by very efficient governments and India is not one of them.

We should go back to our roots in communities. Public finance should be used primarily to subsidize connectivity (ports, airports, rail, roads, airwaves and electricity)in segments where market solutions are not available and private investment unviable. Building and maintaining stuff is best left to the private sector.

The urban-rural divide is an artificial cleavage. Gandhi’s village need not be devoid of modern facilities. Migration should be a choice enabling people to vote with their feet but it is demeaning as a necessity. Spending public money on urban areas is like giving a hungry woman a fish to eat. But investing seamlessly across the country is like teaching people how to fish. Only the latter is sustainable.

Indian Rabudom and Baniagiri

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

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

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

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

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