governance, political economy, institutional development and economic regulation

Posts tagged ‘cash transfers’

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

Liberals; smell the coffee please

police

(photo credit: http://www.thehindu.com)

Liberals and human rights advocates are a queasy bunch with no stomach to face up to the honest truth that effective governance implies a better informed and more intrusive government.

Light handed regulation” is the mantra of neo-liberal economics. But such regulation fails unless the regulator can monitor compliance with the rule of law by acquiring more and better, real time data on individuals and business entities.

Take the simple case of ensuring that shop workers are not exploited by owners and get at least one weekly holiday and enjoy restricted, daily, working hours. The “heavy handed” manner this is done is by shutting entire markets down on a specific day and prescribing shop opening and closing hours. The “light handed regulation” option could give shop keepers the liberty to set their own working hours. But to protect workers’ rights, effectively, it would need to generate a real time centrally networked, database of cash transactions- to validate shop working hours and a bio-metric clock- doing the same for employees working hours.  How does this square with the Liberal preference for “small government”?

Consider the case of self-assessment by tax payers. Regulation cannot get lighter than that. But to be effective, it has to be coupled with predictable and significant sanctions against deviant behavior. This means generating a database, on each tax payer, comprising an effective audit trail of all financial transactions and a tax agent randomly trawling this data, using “red flags”, so that deviance can be detected and brought to trial.

Tracking phone call, social media, emails and physical movement of individuals all becomes part of “Big data” which needs to be captured to provide the information required for credible sanctions systems. This is especially necessary, in democracies like India, where all sanctions are appealable and hence must be backed by “judicial quality evidence”.

“Big data” does have unintended but positive outcomes. The clamour, amongst the elite,  for the status symbol of publicly provided, security guards can be greatly reduced, if “security” comes with a GPS enabled, real time, tracking of location and real time reporting, via a smart phone app, of whom the VIP is meeting as a routine procedure.

No Liberal would object to the installation of CCTV cameras where they live, to protect their lives and property. But this comes with the potential downside of intrusive government. Taking cameras closer to people generates “Big data”. Its value lies in the ability to constantly trawl it to prevent crime (or even natural disasters), by identifying “hot spots” and patterns of criminal behavior and to bring criminals to book. Constraints on individual privacy are inevitable. Also there is bound to be misuse, despite checks to prevent gaming; for example the illegal use of individual information, acquired for security purposes, to black mail individuals. There will always be “insiders”, who could trade off any inherent inefficiency in keeping “big data” secure.

Is Edward Snowden a traitor or an American hero? His country folk were divided on the fine point of the “tipping point” between an “insiders” duty to guard official secrets versus the citizens moral responsibility to fight “Big Government”. There is a stark choice between ensuring security and preserving individual freedom. Too much individual freedom (say the right to religious beliefs which may even bar or restrict social integration, as is available in India and the US) can be as negative as too little individual freedom (China, Russia) in the name of national security.

But the flash points where security collides with individual freedom are more often due to “entrenched privilege” being threatened, than the high ground of morality being squashed.  Indian Liberals, who willingly submit to racial profiling and body searches at US and UK immigration, are outraged if an Indian security personnel, so much as dares to question them about what they are carrying in their bags, whilst boarding domestic flights, trains or buses.

Of course most Liberals in India belong to the elite. For them the State and its officials are only to be suffered, not recognised. There is an implicit sense of “entitlement” amongst the elite, who expect to be “served”, even if they dodge their taxes. Much of this springs from the unfortunate spectacle, of fawning subordinates around a preening public official, in much the same manner, as courtiers may have supplicated before our erstwhile Maharajas.

Liberals mourn that there is too little reliance on “trust” and too much emphasis on “surveillance”. But isn’t it ironic, that in the US: the birth place of Liberal policy practices and “small government”, it is “legally enforceable contracts”, which are the life blood of social and even personal interaction. A society governed by “contracts” by definition, is a society which does trust anyone, including the State, to do the right thing.

It is the same with the theory of incentives. The fundamental basis of neo-liberal policy practice is to embed the correct “incentives” in regulations, which then elicit the desired behavioural outcomes associated with the desired results. The provision of artificially embedded incentives, as neo-Liberal policy practice seeks to provide, inevitably come with intrusive metrics of measurement because what is not measured can neither be sanctioned nor rewarded. Regulatory intrusion, big data and “big” government are the inevitable consequence.

In direct contrast, are systems which rely on “belief”, “religion” or “spirituality”. These seek to bind people to a higher morality and blind them to the needs of individuality. Communism is one such “belief” which relies on the morality of the State and not contracts. Of course, it also comes with high levels of State control and intrusive oversight by a bureaucracy of the faithful, exactly as any other religion.

The Liberal position becomes even more laughable when we consider the available “best practice” on poverty reduction; a key objective for developing economies. “Tightly targeted, cash transfers” to the poor is the latest mantra. But these have to be preceded by identification of the poor; close monitoring of their locations and current incomes. In fact, what this requires is a national database of the entire population of India so that we can segregate the poor from the non- poor; citizens from non-citizens and similarly along any other targeted classification (gender, caste, religion or spatial location). 25% of the Indian population is migratory. This requires “spatial location” enabled assessment of their current economic status since poverty levels vary across states. You can’t get bigger data than all these demographics on 1.25 billion people.

The loss of individual privacy is embedded in the logic of extensive digitization of information. Think of the benefits from being able to identify people uniquely; record their demographics (age, marital status, gender, health and education metrics) securely; store transactions securely and access the stored information instantly. If it is alright for the government to be intrusive versus the poor, why is it so horrible for the “privacy” of the rest to be invaded? The much touted right of the individual “to be forgotten” can exist versus other individuals (though how even that could be enforced is not known) but it must never exist against the State.

“Big data” and a better informed government are here to stay. Liberals should wake up and smell the coffee.

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