governance, political economy, institutional development and economic regulation

Posts tagged ‘Bhenji-Mayawati’

Bulk up to beat the competition

Hulk

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

Big, deep pockets business is in

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

ONGC

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

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

Citizen anxiety at being left out in the cold

anxious citizens

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

Multiparty politics only means larger ballot boxes

ballot

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

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

Smart regulation can weed out frivolous parties

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

Political consolidation as a public good.

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

Mandate rainbow nominations for inclusive politics

symbols

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

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

Leave room to grow 

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

shoes

Adapted from the author’s article in Asian Age, March 9, 2017 http://www.asianage.com/opinion/columnists/090317/in-politics-like-in-biz-bulk-up-to-beat-rivals.html

New social compact : wooing the underdogs

voting

Do Indian voters remain deeply aligned with caste, clan and community (read religious) interests, as reported in the ongoing state elections? Possibly, yes, they do. Continued allegiance to traditional identities makes sense, if new ones never had the chance to take root.

Industrial work was one such silo-buster, as is urbanisation. Both, have had a limited impact on India’s social profile. Large, organised industry employs barely 10 million people, or just two per cent of the workforce. The impact of urbanisation is still far too recent to induce a change in social behaviour. Migration by men, for work in the urban, informal sector, has done a lot to contribute to the urban sprawl. But it doesn’t let new urban identities take root, as families remain village bound.

Modi – disrupting the status quo

No surprise then, if the 657 political parties (many are moribund) that are registered with the Election Commission vie for existing group interests as vote banks. There are only two examples in the past three decades which go against this grain of vote bank politics. The BJP came to power at the national level in 2014 by disrupting traditional identity-based vote banks. In a powerful outreach to young, aspirational India, Prime Minister Narendra Modi provided the instant hope of jobs through a government which worked for them, not against them. This enlarged support beyond the BJP’s traditional vote banks — upper caste and bania groups.

tea-3

Modi exults in the hard work and determination that enabled him to overcome his humble origins  – chaiwala (tea server) – in status quoist India. Mayawati – BSP and Mamata Banerjee – Trinamool Congress are female avatars of Modi.

It helped that Narendra Modi is himself from a backward caste. His is a rags-to-riches story. More important, he flaunts his humble origins and makes a virtue of his struggle to make good. More conventionally, he publicly dons the mantle of the selfless “sevak”. Anybody in the audience could be him, if they only had the gumption to succeed.

AAP – the new “Left”  

aap-uk

The Aam Aadmi Party had similarly disrupted traditional identity politics in December 2014. It fashioned a winning alliance of the urban poor and neo-middle class against the corruption of elites in the Delhi state election. This anti-establishment, anti-corruption model is now facing a test, for its resilience and appeal, in the rural settings of Punjab and the BJP stronghold of Goa — both of which are “rich” states.

Its a tough world out these

wire

Like the Congress during the post-Independence period, Mr Modi’s BJP is shaping a new India. It is an India that recognises today’s harsh international realities. First, unlike the rosy expectations of the 1950s, foreign aid, as an instrument of change, is dead. Economies need to fund their own development, by borrowing from the market or collaborating with foreign investors. This requires governments to bend before those who have the surplus capital; ship up to strengthen their own economies or continue to lag. Second, the consensus of the 1980s, that markets could substitute for the State’s inefficiency, is less credible, particularly after 2008. Strong states seem inevitable, albeit exercising judicious restraint while regulating markets.

A Nobel for the Communist Party of China?

china-politburo

For lifting more people out of multi-dimensional poverty that ever before; for adapting ideology to market realities and for standing true to their national objectives, the Nobel goes to ……. 

China has been the most successful economy, post 1990. It deserves a Nobel Prize for overcoming massive poverty and low levels of human development to become the factory of the world. It accounted for 1.5 per cent of world GDP in 1990 — the same as India. Since then it has cornered more than a fifth of growth in world GDP. By 2015 it accounted for 15 per cent of world GDP and has liberated nearly 300 million people — almost as many as the population of the United States — from poverty.

The Chinese story is of a single-party-managed mega-nation. By mixing market principles of merit and competition with the political energy of a proactive state, it has fashioned a massive politico-industrial machine. China has little patience with the effete romance of liberal idealism. Theirs is the classic hunter’s approach to life — smart strategy matters more than social ideology for filling your belly and remaining stronger than your adversary. This approach resonates in a world where persistent vulnerability to poverty; falling real income and increasingly skewed income distribution clouds even the rich world.

Where is the leadership in India?

tamil-nadu

Reverence for the absent trumps concern for the living, for gathering votes, in mystical India

Mr Modi’s world is that of realpolitik. Performance and outcomes matter the most. In contrast, the other national parties seem dated. The Congress — once a people’s movement, albeit led by professionals — is dormant. The Left is trapped in ideological echo chambers, seemingly unaware that organised, permanent workers are a diminishing vote bank. That economic forces have moved value addition beyond the spatially focused, integrated work areas, of the industrial age. The Lohia movements of the late 1970s rallied the backward castes into regional parties. But these lack vision, credibility or sustainability, beyond their narrow vote banks. The dalits have been transactional in their support for parties, although Mayawati has tried to substitute the Congress with a rainbow-style coalition. Muslims remain boxed into a defensive stance, perpetually seeking the status quo rather than transformation.

Where then do we turn to for leadership in India? The BJP is a clear and credible option. The mantra is that the government must focus on economic inclusion and social inclusion will follow. To take a practical example — higher government revenues from a more efficient tax regime can enable transfer of universal basic income to the poor and marginalised. This neatly avoids the clunky and inefficient option of physically providing cheap goods and services to the poor and caste or community-based support for the marginalised. It may also reduce corruption significantly by around one per cent of GDP.

A new social compact – trade entitlements for opportunity

taxi

The existing social compact between citizens and the State should be reworked. Will citizens be ready to give up their entitlements and de facto freedoms, in return for the State providing more economic benefits — security, macroeconomic stability, jobs, infrastructure and access to healthcare? With money and smartphones in their pockets, people — including the poor — will be able to shape their own societies, without being clouded by the past seven centuries of civilisational shibboleths dumped on them. Can Mr Modi get past the elites who benefit directly from the status quo? 2019 will tell.

Adapted from the authors article in Asian Age March 2, 2017 http://www.asianage.com/opinion/columnists/020317/can-modi-revise-social-compact-2019-will-tell.html

 

The new royals

Everyone loves a royal – especially a British royal, even cynics who claim to disdain them. And why not? There is something reassuringly middle class about being born to the good life and yet having to work hard – saying the right things, looking good, being on time, spending hours chatting with complete strangers and still remain in good humour. The job seems perfect for future age, fail safe robots. Till that happens, the Brits have the royal family – all eighteen of them headed by Queen Elizabeth – who turns 90 next week. Each royal has public duties. Taken together, the family makes itself available for a mind boggling 240 events every month or 8 a day, year in and year out, a burden even the most hardened socialite would wilt under.

royal family

The British royals are an especially diligent lot possibly because they draw their legitimacy, not from a divine right to rule, but from Parliament which contracted them for the purpose in 1701. They are funded from estates allotted to them and an annual Sovereign grant of around GBP 35 million (Rs 350 crores)- considerably more than the Rs 30 crores we spend on the office of the President of India. But consider, that per capita income in the UK is twenty times that in India. So in relative terms, the UK outlay is probably tighter than ours for a similar representational institution.

willkate 1.png

The Duke and Duchess of Cambridge-stooping to capture hearts and minds. Photo credit: rediff.com

The British royals have changed with the times. The stiff upper lip is going. Princess Diana’s inimitable compassion and common touch are now the norm. More significantly, male primogeniture- the gender insensitive British royal practice, whereby a male child always got precedence in succession was ended in 2013 by an Act of the British Parliament.

In comparison, Indian royals somehow never managed to make the transition from being rulers to becoming representatives of the new Indian state. Possibly they failed to brand themselves for the new India. The people’s movement character of the independence struggle, crafted by Mahatma Gandhi, discredited the royals further, as remote, effete relics and toddies of colonialism. Independent India went further. It sought and obtained, the surrender of their sovereignty to the India State in 1949. In 1971 the Indian Parliament abolished their titles and privy purses – pensions to which the erstwhile royals were contractually entitled under the 1949 settlement.

maharaja

Very few Indian royals managed to remain politically relevant. The Scindias of Gwalior stand out as exceptions who straddle the two main national political parties. Jammu and Kashmir royals and currently the Patiala royals also remain politically alive. But the other significant royals – think Hyderabad, Mysore, Baroda, Bhopal, Indore, Udaipur, Travancore, Kota, Bharatpur, Bikaner, Jaipur, Jodhpur and Cochin- have faded from public memory and affection. In South Asia, Bhutan’s royals stand out as proactive modernisers – British style. Nepal royals, in contrast, have succumbed to democracies march- much like in India.

You can abolish a royal by fiat but you can’t legislate royalty away. If you destroy traditional elites, new elites spring up, because they serve a social purpose, as glue, to bind society together, even in a democratic polity. The US has the Kennedys and the Bush family. In India, the Nehru-Gandhi family endures and inheriting a political legacy is pervasive. In 2011, 29% of the Members of Parliament were from established political families. But it is debatable whether these “political royals” have the affection of the people. It is telling that Amma, Didi and Bhenji- immensely popular in their areas – are all “Marlboro” women – who have built their political eminence not inherited it.

priyanka

The 2016 Padma Awardees: Photo credit: masala.com

But the real royals of independent India are movie stars, cricketers and the owners of big business- all fiercely competitive and determined to succeed against all odds. The Kapoors of Bollywood – traditional royals mix shoulders with new royalty- the Bachchans, the string of bigger than life “Khans” and Priyanka Chopra- who got a Padma award yesterday. We have an entire locker room of cricketing royalty, of which Mahender Singh Dhoni and now Virat Kohli are the most recent. Star struck business honchos abound. These “new royals” inhabit an interlocking and sometimes toxic world, of business, cricket and movies.

shahrukh

William and Kate – the Duke and Duchess of Cambridge, in line to succeed to the British throne, are of this generation of competitive royals. It is not surprising then, that they chose to schmooze with the new royals of Mumbai in their search for creating “new” Indian memories on their recent visit.

Tragically however, Mumbai’s mojo has yet to infuse Delhi, which remains near colonial. Never mind the eye balls you may draw; the advertising revenue riding on you or the name recognition you command. If you did not become a bureaucrat by age 25 and if you are not in politics, it is unlikely that the government will ever select you to serve the nation in a representational position – as Governor of an Indian state or as an Ambassador overseas. Incidentally, both positions entitle you to fly the tricolour. And so the wealth of available talent — academic, artistic, scientific, professional and entrepreneurial, is ignored. Is it surprising then that government is so stiflingly insular and non-competitive, quite out of keeping with the mood of the nation? Imagine our dated we are. The website of the British monarchy is at pains to inform you how much is spent on the Royal Family. The website of the office of our President is silent on this information and since Parliament does not vote to approve these expenses they are hard to come by. President Mukherjee has done more than most to open up the premises. But the institutional culture is forbidding.

RB

Rashtrapati Bhawan- our gated colonial inheritance- preserving the green but keeping the unwashed out?

The Padma awards, announced annually are our only mechanism of recognizing exceptional civilian personal merit and national service. These serve the purpose of one-off recognition. But independent and demonstrated talent should be associated more routinely, at every level of government, to leverage experience, build capacity and kindle the spirit of innovation.

Multilateral agencies, including the United Nations, are adept at co-opting celebrities to helm good works and campaigns. The British use their royals very effectively for showing the flag. Why not use our new royals similarly by vacating sarkari space for them? Give Padma awards to recognize long and meritorious service in official and public life. Give Governorships and Ambassadorial assignments to those who distinguish themselves in real life and wish to step out temporarily to serve the nation directly. You would be surprised at the power of incentives to change things around.

 

 

Beef and Toor fry BJP in Bihar

The national hype around the “beef ban” issue and the rise in the price of toor daal has done what the combined political force of other parties could not do — humble Narendra Modi in Bihar. Both are self-goals by the Bharatiya Janata Party.

humble modi

photo credit: http://www.arun-wicfy.quora.com

Whose duty is it anyway to regulate agri. and food?

The regulation of land, agriculture and food is a mandate of the state government in the Constitution. But Central governments, including the BJP, have been happy to meddle in this mandate via the provision of trade and commerce in food in the Concurrent List of the Constitution. They do so to appear muscular and confer favours on farmers, traders and consumers. The setting of procurement prices for food crops at much above the market price, the physical management of publicly-owned food stocks and the subsidisation of consumer prices are low-hanging fruits for both populism and patronage.

Far better if the Central government had stayed clear away from this area and told voters frankly that it was for the Bihar government to manage the price of daal. On the beef ban, the BJP should have stuck to the constitutional position that the cow is to be “preserved” per the Directive Principles, and it was for state governments to decide local policies regarding preservation.

Instead, the BJP ground troops have raised a national ideological furore over a non-issue. Beef is an inferior meat internationally because of its adverse health (high cholesterol) and environmental (high carbon emissions, high water consumption per unit) consequences. In India, it is an inferior and cheap meat, eaten mostly by the poor. Rich Muslims would rather eat goat or chicken biryani, much like Hindus and Christians, rather than beef.

But it was not to be. It seems the BJP ground troops will not easily allow Prime Minister Modi to grow out of the narrow, Hindu, nationalist role they have set for him. This was expected, but what is surprising is his inability to control the foot soldiers.

Bihar matters

Winning in Bihar would have raised the Prime Minister’s image of “invincibility” sky high. The “crabs” within the BJP would not have liked this. They were happy to hang on to his kurta tail and be carried along by the tsunami in 2014. Now that the next day of reckoning is only in 2019 — a full four years away they prefer a Prime Minister, dependent on their individual support. What could be a better opportunity than to play the Hinduism-under-threat-from-beef card in the middle of the Bihar elections?

On the price of lentils, Mr Modi’s penchant for muscularity is primarily to blame. It is not the job of the Central government to keep prices in check. State governments should have mechanisms for doing this. Importing food in short supply from outside the state or from overseas to keep prices regulated is one option. But, more importantly, isn’t it about time our governments got away from the business of setting market prices for all segments of the food value chain?

Re-regulate agriculture and food

Price spikes and troughs provide important signals to growers and traders, and dictate what farmers sow. Expectations of price intervention by the government distort these signals and inhibit farmers from their legitimate right to profits when a crop fails just as they would suffer a loss when there is an oversupply.

To insulate poor farmers, farm workers and poor urban folk from extreme price fluctuations, direct cash transfer is the answer. Who can say what consumers would do with the extra cash the government gives them? They may not buy toor at astronomical prices at all. They may opt for other, cheaper varieties of pulses — moong, masur or channa, or prefer milk, meat, lobia or nutri nuggets, or a mix of all these.

Is there a BJPnomics?

The BJP has yet to grow a coherent economic philosophy. Often it glories in being market and business-friendly. At other times it shies away from this label, just like the Congress Party, because it is perceived as being anti-consumer. Many within the BJP are more socialist than the communists! They want to preserve the public sector and they want visible, often unnecessary, intervention by the government in everything — what to wear, what to read, what to see and what to eat.

This ideological clutter needs to be cleaned out. Otherwise, the BJP risks looking like a more stridently Hindu version of the Congress, rather than a modern, nationalistic party which believes in markets, equity and inclusive growth.

Next two years- a blur of elections

The good news is that the Uttar Pradesh elections are still one year away and there is still time to repair the damage for a “real” contest between the Samajwadi Party and the BJP. The Samajwadi Party is a homegrown party of Uttar Pradesh with an indifferent governance record. It is perceived as a dynasty, caters mostly to Ahirs and enjoys strong support from Muslims via their champion Azam Khan of Rampur — the erstwhile “princely state” in western Uttar Pradesh, adjoining Moradabad.

azam khan

photo credit: http://www.indianexpress.com

An understanding between Bhenji (Mayawati) of the Bahujan Samaj Party and the BJP would strengthen the Prime Minister’s hand to define the electoral line-up. Both the BJP and Bhenji, have a good record in the management of law and order, and both appeal to the rainbow spectrum which Bhenji tried to create earlier, spanning the upper castes and the dalits. This consolidation is what the BJP attempted in Bihar. It remains a viable strategy for Uttar Pradesh despite the outcome in Bihar. It will also be useful for the BJP in adjoining Uttarakhand in 2017.

bhenji ambedkar

http://www.rakeshjhunjhunwala.in

But it is a long way to the Uttar Pradesh elections in 2017, past Pondicherry, Assam, Tamil Nadu, West Bengal, Kerala in 2016, and, thereafter, Goa and Punjab. The BJP would do well to be conservative and focus on Assam, Kerala, Goa and Punjab, leaving the other states to regional partners. Selectivity of political effort will free the central leadership to also do some work in pushing the reform agenda in tax, infrastructure and digital governance.

Unlike in Bihar, the BJP must start grooming regional leaders in all these states so that it is not a solo effort by the Prime Minister. Identifying regional leaders broadens the table and gives more elbow room all around commensurate with the size of India. Inclusion is of the essence in a democracy.

Adapted from an article by the author in Asian Age October 23, 2015 http://www.asianage.com/columnists/beef-toor-frying-bjp-bihar-058

Navigating India’s “perfect storm”

BeltTight

(photo credit:www.webmd.com)

It’s final now. The run of good luck PM Modi enjoyed has tapered off.

The monsoon is likely to be deficient by 12%. This would be the second year in a row. True, agriculture only accounts for around 15% of the economy and didn’t grow much last year either. But when you target 7.8% growth every basis point, added or lost, counts.

Manufacturing and services growth is already slow. Companies are at best cautiously optimistic but the caution makes new investment sticky. The money and jobs spinning realty sector, driven earlier by negative interest rates, is in a slump.

To complete the “perfect storm” scenario there are two important state level elections around the corner-Bihar later this year and UP in 2017. Neither state has BJP governments currently, so doing well in these will inevitably be a metric of how strong the Modi magic remains.

The good news of course is that every threat is also an opportunity. This is PM Modi’s opportunity to show that he is the Lion we think him to be.

Fiscal stability disaster prone

First, more will need to be spent on drought relief; restructuring of bank loans for farmers and income support schemes for farm workers. Delhi, admittedly with a miniscule rural area, has already distributed Rs 50,000 per hectare as relief for the farmers hit by the April 2015 unseasonal rain. FM Jaitley is possibly right that the drought will be localized in North and Central India. But these regions account for around 45% of the farmers. Retaining the targeted revenue deficit at 2.8 % and public investment at 14% of the budget will consequently be tough.

Postponed subsidy reform

Second, it is unlikely that subsidy corrections will now be possible this fiscal. Cheap electricity, water and fertilizer are here to stay with a possible relaxation of the tight minimum support price policy of the last few years.

Higher wage cost

Third, a significant expansion in the wage bill looms. For the armed forces it is the One Rank One Pension promise of the PM.  For the Civil Service the recommendations of the 7th Pay Commission are to kick-in from 2016. Luckily the wage bill is low by international standards- 1.6% of GDP and 14% of the budget. But even small incremental increases, unless accompanied by efficiency enhancing restructuring, are not affordable this year.

This perfect storm of shocks cannot be wished away. Better to deal with it upfront. Here are five suggestions:

Winning the market perception battle

First, don’t be cowed down by stock market fluctuations or seek to pander to them. These are short term adjustments by speculators and not reflective of annual economic prospects. Consequently, rather than play down the “perfect storm” scenario it makes sense for the government to highlight the extreme shocks they are battling with to keep economic growth growing. Even in this David versus Goliath scenario, what is key is to share a plan of action on disaster management; income support; and realigning revenue expenditure to retain the revenue deficit and investment target.

Nothing much was heard about the recommendations of the Bimal Jalan, Expenditure Management Committee (August 2014). But it could provide some useful strategic, short term revenue expenditure rationalization measures.

Cut the Red Tape

Second, stressful times also create an environment conducive for administrative reform. PM Modi’s can quickly lick babudom into shape through positive strokes. He should consider setting up a lean but empowered “Decision Support Team” in his office, manned by ten senior Joint/Additional Secretary level officers selected for their expertise in key sectors; their ability to persuade and their flair for collaborative performance.

They would be mandated to speak for the PMO and be tasked to work with the key ministries and state governments to cut through red tape holding up investment decisions. Working against weekly targets with real time feedback to the PM, the mantra for this team should be “ANA- Achievement Not just Activity”.

Those taking up such high tension assignments should expect to be on the fast track to become Secretaries to the GOI.  The PM is known to be cagey about trusting officers beyond a tiny circle familiar to him. This is not surprising given that he has never worked closely with the babudom in Delhi. But he should experiment by subjecting a larger group to the “agnipariksha” of performance. He will not be disappointed with the results.

Forget the optics of who gets the credit

Third, the knotty problem, particularly in Bihar and Uttar Pradesh, is how to be proactive in the face of state governments, which have the incentive to rebuff such support as being politically motivated.

The farmer does not distinguish between the state and the Union government (Lokniti Survey 2013) – 58% held both the state and the Union government responsible for the sorry plight of agriculture. If farmers fall through the gaps of political finger pointing, they will punish both the BJP and the SP-in Uttar Pradesh and the JD (U)-in Bihar. The beneficiaries of apathy will be Bhenji (Mayawati- the BSP supremo) in UP and Lalu Yadav in Bihar. Doing little is not an option for the Union government despite some of the shine rubbing off on the SP and the JD (U).

Don’t rattle the private sector

Fourth, it would be a big mistake to take too seriously the campaign to paint the BJP as a consort of the corporate sector. When stern action is warranted, it must be taken transparently and without rancor or bluster. But a “Preet Bharara type” of regulatory action is not what we need. Jobs are what the average citizen wants, which only the private sector can generate them.

Strong arm regulatory actions against foreign investors are bad optics- both for investment and for citizen sentiment. If our regulatory agencies are seen to be handmaidens of the government, they lose credibility. But the government also loses by devaluing an efficient instrument for regulating the private sector in a hands-off, technical manner.

Sticky revenues

Fifth, boost revenue. The tax receipt scenario is grim. First, projections for the year were over optimistic at Rs 14.5 lakh crores (US$ 230 billion) around 16% higher than the previous year. Tax receipts are bound to slide with slow external and domestic demand and lower corporate profits, despite the 15% increase in the rate of service tax. A tax receipt equal to last year’s estimate of Rs 13.7 lakh crores (US$217 billion) or 9% more than the actuals of last year is the best we can hope for- 5% points due to inflation and 4% points due to growth of the taxable base.

Getting more tax payers into the net is a worthwhile but effort intensive option with limited upsides. In 2013-14 there were 47 million direct tax assesses. New assesses have varied between 1 to 3 million per year since 2011. Even doubling the number of new assesses helps only marginally in additional revenue.

Transferring the crown jewels to citizens

There is more upside in fast tracking disinvestment. Listed Public Sector Undertakings (PSU) account for 13% of the valuation of the Bombay Stock Exchange or around Rs 13.6 lakh crores (US$ 215 billion). Of this, some equity is already held privately by minority investors. But an additional 10% can be sold without diluting government’s majority control. The problem is that, in the past, Institutional Investors have been the primary takers for such shares. Retail investor appetite has been largely absent from the tumultuous stock market for some years now and market momentum has been primarily provided by Foreign Institutional Investors.

Selling PSU shares in large volumes, without transferring majority control to the private sector, dampens the market price. Even the private IPO market is slow. Government is wary of inviting the charge of crony capitalism by selling shares to large institutional investors at cheap rates.

On the other hand, selling directly to retail investors is more defensible even if the price is low. After all the “Crown Jewels” really belong to citizens. Dispersing the ownership of PSUs widely also meets multiple objectives. Why not borrow a leaf from Dhirubhai Ambani’s 1982 market making strategy and incentivize the retail investor back into the market?

Link disinvestment, as a sweetener, to the issue of government debt for retail investors only – special convertible bonds – with a fixed return for three years at the prevailing Government Bond rate. 50% of the face value could be optionally convertible on termination in 2018-19, into a balanced bouquet of public sector equity at a 15% discount to the then prevailing market price.

A sequenced, mega issue of Rs 1 lakh crores (US$ 16 billion) of an asset backed government security can reduce the short term risk profile of PSU equity investments and pull in finance from an alternative source.

Government must come out with an evidenced strategy to deal with the “perfect storm” India faces. Of course, the PM is a “lucky General”. The drought may not materialize; the world economy may sort itself out and the opposition in Bihar and UP may self-destruct. But waiting for this to happen may be pushing the Gods too far.

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