governance, political economy, institutional development and economic regulation

Posts tagged ‘Kejriwal’

Some more onions please

Onions comprise less than 1% by value of India’s agricultural production. The average Indian consumes less than 800 grams of the stuff per month. Onion is a seasonal fruit. Supply traditionally dips during July to September as only the stored winter crop, harvested around March, is available for consumption.

No dearth of onions

onions

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

India is the second largest producer of onions after China. We produce more than we need and export around 10% of production unless weather events adversely impact the crop. This year unseasonal rain, during harvesting, damaged the winter crop.

But demand is inelastic

Demand is relatively inelastic. Why don’t consumers say no when prices increase? First, onions are to palates in the North, Central and Western parts of India, what fish is to Bengal and curry patta and coconut is to the South. Food, chips even Uttapams taste better with onions. Onion, like Garlic, is also valued for its therapeutic value. Second, onions give a big bang for the buck. An average family spends around Rs 100 per month on the stuff. If price doubles, the burden is irksome but not a killer. Just economizing on pre-paid phone calls can make up the difference. But onion is the key savory for low income households.

It’s the politics stupid!

The fuss about onions is more about politics than economics. The political footprint of onions was established in the 1980 elections. Mrs. Indira Gandhi, on her comeback trail, after her post-emergency election debacle, shrewdly used the price rise in onions to drive home how uncaring of the ordinary person and how incompetent, the government of then Prime Minister Chaudhary Charan Singh had become. This clicked. The Congress won 67% of the Lok Sabha seats. In 1998, a sharp price rise in onions, dethroned the BJP government of Chief Minister, Madanlal Khurana in Delhi thereby establishing a new metric for good governance – the price of onions.

Delhi CM Kejriwal fingers the BJP for price rise

Delhi Chief Minister, Arvind Kejriwal has fingered the Union government for failing to control hoarding and speculation leading to the current price rise. Delhi government flooded Delhi markets in mid-August with onions at Rs 30 per kg. It plans to hold the price line just below Rs 40 per kg through public sector retail supply versus a market retail price of Rs 70 to 80 per kg.

Union government on the back foot

But the Union government claims this is too little and too late. More nimble footwork by the state government could have prevented the steep rise in onion prices in Delhi. The Union government had made available a Price Stabilization Fund of Rs 500 crore in April 2015 which state governments could use by contributing an equal amount to buy onions for retail supply at reasonable rates.

On July 2, when wholesale prices were still around Rs 20 per kg in Lasalgaon, Maharashtra-India’s largest onion mandi, the Union government brought onion under the Essential Commodities Act, thereby enabling stock limits to be enforced on wholesale agencies. It also enforced a Minimum Export Price of Rs 30 per kg to discourage exports.

In todays’ intensely adversarial, no-holds-barred competitive politics no government can ignore a public challenge. The traditionally business friendly BJP government, at the center, is particular sensitive when “hoarders” are fingered for the price rise. Maharashtra, Madhya Pradesh, Gujarat, Haryana, Andhra Pradesh and Punjab- all BJP/allies governed states – account for more than 60% of national onion production.

Grow more onions, reduce trade margins & transaction costs

Per a NCAER 2014 paper selected productivity enhancement can boost roduction. Three big onion producing states- Maharashtra, MP and AP- account for 50% of production but produce less than 17 kilo gram per Hectare against 27 and 21.5 kg/Ha in Gujarat and Punjab respectively. Again all three are ruled by BJP/NDP. Increasing productivity in just these three states can boost production by 20% ensuring sustained exports and no domestic shortages. Doing more on reducing the trade margin (better storage, faster transportation, lower market fees) can also leave more of the money with farmers whilst lowering domestic prices.

Clearly the government needs an effective and transparent mechanism, which provides the right price signals and rationalizes expectations for both farmers and consumers.

Killing export or killing farmers

Increasing the Minimum Export Price, as the government has done again this year, is the standard response. But such intervention in the market, even as it helps consumers by diverting supply to the domestic market, robs farmers of the gains from export. It also disrupts any attempt to develop export markets. Similarly, importing onions to keep consumer price low reduces the incentives for farmers to grow onions.

The fall back-leaky public distribution

But both these options are less intrusive than using the public procurement and subsidized retail supply template used for food grain. Such publicly managed mechanisms are invariably highly inefficient and ineffective with cascading losses in procurement, storage, transportation, distribution and retail sale. Sometimes inept government managed imports flood the market after the seasonal supply dip has passed and just as the new crop arrives- with disastrous impact on farmers’ incomes.

Can private distribution agencies do better?

Why not appoint a private trading agency for marginal but politically sensitive food crops, mandated to import, export or arrange for domestic distribution to balance market led demand and supply and keeping retail prices within a pre-defined retail trading band, which meets the twin needs of both farmers and consumers. This is what the RBI does for our currency to avoid excessive volatility.

Private trading agencies would charge a hefty commission for their services but it would be considerably less than the cost of direct administrative action to purchase, stock and supply onions along the Food Corporation of India model.

Onion diplomacy anyone?

Alternatively, use onions as a vehicle for building bridges with our neighbours – particularly Pakistan, which loves the stuff almost as much Punjabis. Why not negotiate a stand- by, bilateral onion supply agreement to meet onion deficits in either country on preferential terms? A similar arrangement is possible with our larger northern neighbor- China whose onion productivity exceeds ours’s. Onions can add a savory flavor to Track 1.5 – B2B- diplomacy.

Say no to expensive onions

Isn’t it high time the government bit the political bullet and said no to being bullied about the price of onions? They are not a necessity, which the sovereign is obliged to supply. The Jains don’t even touch the stuff.

To show that onions are dispensable, the entire cabinet should voluntarily say no to fresh onions during the lean period. PM Modi could launch a social media campaign to entreat well-off folks to substitute fresh onions with dried ones or switch to other seasonings, during the lean period. This can reduce demand and hence prices for those, to whom onions are the only savory they can afford other than salt and chilies.

The core of sustainable living is to adapt to what is seasonally available locally, rather than store, pack, can or transport food compulsively to cater to a menu plan made universally available but at a high cost to the environment.

Politics trumps economics hands down

But the catch is that Bihar is a big consumer of onions. People are unlikely to be amused if they can’t get their daily fix of onion, before they go to vote in November. This is one election the BJP needs to win. Visible, strong, centrally managed administrative action to lower retail prices is therefore likely to win over better options – after all the metric of good governance has to be met.

Adapted from the authors article in Asian Age August 31, 2015

BJP, take five!

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(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;

BJP dials 100, Bedi to the rescue

(Reposted from the Asian Age January 21- http://www.asianage.com/columnists/bjp-dials-100-bedi-rescue-021)

bedi_kejriwal

(photocredit: sahilonline.org)

The DNA of Kiran Bedi and the Bharatiya Janata Party seem twinned at birth. Bolly-wood films thrive on the “masala” (formula) of twins separated at birth but reunited after an epic struggle with a happily tear-jerking end. The BJP and Ms Bedi finding each other after so long is real life imitating art.

For both, “discipline” comes with a capital D. They share a strong belief in the ability of large, efficient organisations to provide direction and in the efficacy of formal rules and regulations to manage society.

“Crane” Bedi could as well have been known as “danda” Bedi. Armed only with a wooden baton, she single-handedly charged at a bunch of unruly, sword-wielding Akali protesters in Delhi. The BJP is similarly admired for strong leadership and decisive action.

Kiran Didi mesmerises kids just as Mr Modi does. In both these leaders kids see a strong, stern but clear-headed “parent” with a consistent idea of what to do next and the ability to prescribe, what seems to be, a winning game plan. They have a common bias for acronyms (Kiran Didi’s 6Ps — police, prisons, prosecution, people, parents and press — compete with Mr Modi’s 3Ds — democracy, demography and demand) and a shared communication style of keeping the message simple: Hard work, discipline, steadfast goals and an alert mind ready to grab any opportunity being the mantra for advancement.

Business people, Punjabi refugees, professionals, the “sarkari” middle class and all those with a stake in preserving the status quo form the core urban constituency of the BJP in Delhi. They all look on Kiran Didi with approval. She is a Punjabi herself; a self-made professional who strove to excel at whatever she did and ensured that she got recognised for her achievements. Professional aggression, ambition and, above everything else, success, is what this core constituency adores. These attributes Ms Bedi has in plenty.

Given more time, Ms Bedi could have consolidated the woman vote behind her. She is today a mélange of what many young girls dream to be a mother, a successful government officer, an outspoken social activist, a TV personality, a politician and, implicitly, very much part of the Delhi elite.

But time is scarce with barely three weeks to go for the polls on February 7, 2015. Indeed, the fact that time was running out is what induced the unorthodox induction of a “rank outsider” into the BJP, ostensibly to lead the campaign and, possibly, eventually become the chief minister. Galling as it must be for Mr Modi that his name was not enough to pull in votes in Delhi, the fact is that the BJP must look at systematic dispersal of power and responsibility if they are to win in Bihar and later in Uttar Pradesh.

This, in fact, is the way it has been thus far. BJP chief ministers in Madhya Pradesh, Rajasthan, Chhattisgarh or Maharashtra do not view themselves as subordinate to the Prime Minister, at least not yet and certainly not in the manner the hapless, erstwhile Congress chief ministers were with regard to Sonia Gandhi.

The induction of Kiran Didi should also be read as a sign that Mr Modi is not averse to modernising the BJP and aggressively broad-basing its membership beyond the rather obscure agenda of the Sangh. Mr Modi seems to be working towards reinventing the BJP as a party of the right, committed to small government functioning on the P4S principle of private sector-led growth, security, sustainability, social protection and passive secularism.

Both the BJP and the Aam Aadmi Party have their core support base intact in Delhi. It is the direction of swing in the erstwhile Congress supporters — Poorvanchali migrants, scheduled caste, scheduled tribes and the Muslims which will determine the vote change this time around.

Ms Bedi’s induction into the BJP is a game changer because, first, she has the star appeal and freshness to attract the middle class supporters of the AAP who were disappointed with Arvind Kejriwal’s reluctance to rule in 2013 and in whose eyes Mr Kejriwal became an opportunistic quitter. Many were coming around to the idea of giving him a second chance rather than support a “traditional party” like the BJP. Now they see in Ms Bedi an alternative, the manifestation of a “new” BJP just as AAP was in 2013.

Second, Ms Bedi shall attract the wavering, non-Muslim Congress supporters who are rudderless today with the demise of the Delhi Congress. For aspirational women and the educated professional, Ms Bedi’s BJP seems to be the true inheritor of the Congress’ erstwhile mantle of stability and development which kept it in power for 15 long years (1998-2013).

Third, the BJP’s core base is unlikely to reject the “outsider” Ms Bedi who exudes success and brims with optimism. Too much is made of the disaffection of the old-time Delhi BJP leaders. These are long-term political players, honed in the Sangh’s discipline to never break ranks. In any case, they can easily be assured that Ms Bedi is only “transiting” through Delhi to enter the national government, where she would get more traction. Police, land and housing in Delhi are all dealt with by the Union government. In fact, the Delhi government is more like an empowered metropolitan authority rather that an Indian state.

With the Congress in decline, Delhi elections are a face-off between the BJP and the AAP. The AAP 2013 phenomenon was a unique convergence of the middle class and Delhi’s “underbelly” votes. But even this coalition was not sufficient to get AAP a clear majority. This time around the AAP will be boosted by significant Muslim support which earlier kept the Congress in power. But even within the AAP’s core support base they will have to contend with Ms Bedi attracting women voters.

Ms Bedi is a powerful role model and a convincing administrator to assure the empowerment of women and their protection, not least because of her linkages with the police.

If Kiran Didi can project herself as the “face” of the “new BJP” — forward-looking, effective, gender sensitive, socially progressive, honest and committed to equitable development — she may well nudge the BJP towards forming the government in Delhi.

The Bedi baan (arrow) unleashed by Mr Modi is sure to give sleepless nights to “King Kejriwal” as he trawls the slums of Delhi to keep his flock intact.

PM Modi “let it be”

mother mary

PM Modi should consider listening to the “words of wisdom” in the famous 1970 Beatles hit –“Let it be”.

Of course in this cruel results centric world of ours, only those who get going fast and hard survive. But there are virtues also to sometimes take a call and just let things be.

Take for instance the manner in which BJP is keeping up the electoral rhetoric. Amit Shah the BJP President is everywhere exhorting voters in Bengali and Tamil to vote BJP. The adoption of “shock and awe” tactics- the use of such overpowering force that it leaves the enemy convinced that defeat is certain and thereby demoralizes them- is useful especially since the BJP is adept at using technology and has “Sangh boots” on the ground to realize this tactic in real life. Such tactics may work, but not against an extremely well organized and determined enemy- like the Afghans or Kejriwal.

In fact Kejriwal would welcome the adoption of the tactic in Delhi to magnify his underdog status and “David versus Goliath” effect. Ironically, in Delhi the BJP is painting Kejriwal as the “shock and awe” man with an Rs 100 crore election budget. Be that as it may but Kejriwal’s electoral base amongst the poor and the Muslims seems intact and he will give the BJP a rum fight.

The real question, is should PM Modi bother about Kejriwal? Some fights are best lost. After all India would lose its democratic plurality if every Indian state government from Kashmir to Kanyakumari became saffron-the BJP colours.

A ceaseless election rhetoric also has the downside that it does not allow the adversarial environment to cool down for the business of governance to commence. This the BJP can ill afford since it has built its election agenda around performance and shall be judged accordingly.

If Parliament cannot function harmoniously; if state governments get deadlocked in confrontation with the center, the development agenda, the BJP so desperately needs to implement, will remain just good intentions and plans.

The dilemma confronting the PM is starkly outlined by the Mid Term Economic Analysis 2014-15, the first document authored by the new Economics team in the Ministry of Finance, headed by Arvind Subramanian.

The Analysis notes that all through the period 2007 to 2010 it is private investment which led growth. It acknowledges that private investment has dried up. Corporates are deep in debt- partly due to their own greed in lapping up cheap debt because all through this period, inflation rates exceeded interest rates making it a no brainer to access debt- but also because investments have not resulted in revenues and remain locked in incomplete projects bedeviled by land unavailability; fuel shortages; contractual disputes; scams; and hold up in environmental approvals.

Rapid institutional reform (the underpinnings of good governance) could attract private investment for growth but the Analysis is starkly honest and pessimistic about the possibility of institutional reforms in the near term.  Apparently the PPP model is “broken” and cannot be fixed in the near term. Ergo the only available, albeit second best option, is to pump up public investment to compensate and hope to kick start private investments.

The efficacy of a public finance led growth option is not the topic of this post. The dangers are well known. No amount of public finance can fix a “broken” system. The more we rely on public finance led investment; national champions and a necessarily interventionist government; the deeper we slide into the morass of mega scams; gold plated projects; monopolies; tariff walls to “nurture” the consequential white elephants built using public finance and a further erosion of state credibility. This is exactly what the opposition wants to happen, so PM Modi should beware.

Political nirvana lies in sticking to the path the PM propounded when the country voted for him.

First, work doggedly to reform institutions in the near term. The near term is not as near as the next budget in February 2015, it is till end 2015 by when election fever will grip Bihar and then Uttar Pradesh. This can be done by building a team of selected state governments, the higher judiciary, Parliament and the trade unions all working to a minimalist institutional reform plan, which stops at causing unbearable (and uncompensated) pain to any one actor. That is the essence of democracy.

Second, PM Modi should rise above the metric of stock market numbers. What matters to him is an improvement in the lives of the average voter.  These are not people who live or die by what is happening on Dalal Street. Stick to the “micro economic” problem of making their lives better and here we have a problem. The ongoing deflation (reduction) in rural wages, as the Analysis maps, is not a desirable outcome for the poor, especially in an environment in which government servants are 100% inflation indexed.

But above all the PM has a political choice to make. Is it better for the BJP to continue to hog headlines via an adversarial electoral agenda or reserve the “shock and awe” effect for later in 2015 when preparations for Bihar and then Uttar Pradesh elections kick-in?

He would be well advised, in these troubled times, to “listen to Mother Mary and let it be”.

(This blog is dedicated to my Grand Nephew Angad Ahluwalia, age 6, whose favourite song is “Let it Be” and whose current ambition is to be a Lead Guitarist in a band.)

What now Mr. Kejriwal?

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What was Kejriwal thinking on his flight back from Varanasi yesterday? Did he reflect on how difficult it is in a competitive environment to get a second chance? Where would he have been, had he not frittered away his government in Delhi for a notional presence pan-India?

Maybe he was caught up in the colorful, marketing jargon, which is so popular today, to explain the “why” and the “how “of politics in a four second TV byte. Maybe he believes that he has launched a Unilever style product-shampoo in a sachet-affordable even by the aam admi and that this will be the basis of a pan Indian political empire. A top down campaign, with credibility in Delhi, translating into votes everywhere in 2019 (?) or maybe even 2024? Maybe he pondered over how to leverage himself as a brand better- an anti-corruption crusader; a karamyogi who has sacrificed a brilliant career for public service; a Gandhi (Mahatma) incarnate; a 21st century social reformer?

Possibly he does not think in the self-serving calculus of electoral gain and loss and seeks only to elevate the level at which politics is played by opening a door for decent folk, who otherwise would never have sullied their manicured toenails in the keechad of politics where the lotus blooms and the Congress mucks about.

Alternatively, he may think that a pan India campaign could surely lay a solid ground for the Delhi elections when they are held. His entire national team, which must number now close to 20,000, could descend on Delhi (RSS style) and escort every AAP voter to their booth….if they haven’t already been captured by the RSS or a desperate Congress?

Maybe he actually thinks he will win in Varanasi-that niggling (what if) last thought that smuggles its way in, just as you have drunk the “nimbu pani” and eaten the “veg” sandwich and are drifting off to snooze land, your “jhadu topi” slanted over his eyes, to screen the bright sunshine out and your seat fully reclined.

Possibly he was working out strategies to convince the Delhi voter that voting AAP is not the same as pushing the NOTA button. That this time they would be there to stay and work, not run about like a consultant, signing contracts everywhere, but executing none satisfactorily.

Is it time, Mr. Kejriwal to merge into the great Indian political mela? Is it time to build alliances with like- minded parties? The left is your natural abode. For all your talk of supporting the private sector you are a quintessential public sector man. This happens often with those, like you, who know how rapacious and self-serving small business can be. You forget that the rapaciousness of the Indian Bania is not built into her genes. It is an outcome of surviving for centuries on their own with no one else to protect them or their assets, but themselves and in the face of a grasping State which seeks only to marginalize them in the name of modernity.

Business is often a “winner takes all” game and inevitably results in huge concentration of wealth in a few hands. This is why inequality has grown significantly all over the world as business has flourished. This will not set well with your fuzzy, socialism and “equity” over growth, orientation. Be clear for once. The aam admi can never hope to have an equitable share in the wealth generated, if private business is to grow the economy. The problem is that only private business can grow the economy. But whilst growth is inherently iniquitous there are ways to induce a modicum of equity by providing opportunities to everyone. There is no option to rapid growth……to borrow from Churchill’s take on Democracy. Your fuzzy philosophy and panchayat penchant will not be able to accept this hard fact. That is why common cause with the Left is best.

Of course no one wants to side with a loser. In fact mere association with the tired shibboleths of the Left, are enough to put any voter off. But then you will not find gold plated options for getting into government every day. Possibly you and your supporters could revitalize the tired, old, men and women of the Left with your youthful energy. You share many of the virtues of the Left; austerity; financial integrity; a mass contact strategy; cadre based functioning; inner party democracy, a concern for visible equity.

Alternatively you could also align with the BJP/RSS who also share these virtues. Both you and Modi appeal to the same, young, aspirational voter who has remained an “outsider”. But of course you do not align with anyone. Good luck Mr. Kejriwal.

 

Recall; a “second-chance” for voters

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It is never easy to choose. It becomes even more difficult if one is unsure how well your choice will work out. It becomes easier if the store you are buying from has a return’s policy. Even the Hindu Marriage Act permits divorce in case of irreconcilable differences or incompatibility. Why then should a voter be stuck with a representative who is just goofing-off for five long years?

India does not give voters the right to recall their representative to the glorious state of being an aam admi, if she does not perform as expected or fails to pursue promises made in the heat of the electoral battle. Retribution is possible only after five long years. The result is irresponsible promises made by candidates at election time and every conceivable excuse being trotted out over the next five years why they couldn’t be kept. Imagine how this would change if elected representatives could be recalled by dissatisfied voters.

Other than the 30 million workforce “aristocracy” employed in the formal sector (public and private), who enjoy security of tenure and termination benefits, the rest of the Indian workforce (370 million) labours in casual jobs, short term contracts or is self-employed. They live with the constant threat of dismissal or loss of employment. Why should the Damocles Sword of recall not also hang over the heads of politicians?

Recall powers are available to voters in the US, Switzerland, Venezuela and Canada. Some experts argue that even where such powers are available, they are rarely exercised, so why bother? This is short sighted. As any negotiator knows, the threat of possible retribution is far more effective than the action itself. A recall provision has multiple advantages. It reduces the risk for voters to experiment with untested candidates and thereby enhanced political contestability. It can also reduce the use of money power and make politicians more accountable.

Today few Muslims, outside Gujarat, would vote for Modi. It is not his economic policy that puts them off. Nor do they doubt his executive ability. Their main fear is of potential social instability, sectarian strife and possible subversion of India’s secular credentials, if Modi becomes PM.

“Proof of concept” is a standard instrument in contract negotiations which reduces risk and facilitates efficient contracting. What if Muslims had the option to give Modi a chance and yet retain the power to withdraw support in case they find him wanting? Is it not reasonable to assume that many would vote with their head rather than their heart? That they would be more reassured of choosing freely, without the fog of fear so prevalent today.

Conversely, the traditional supporters of the Congress (the poor, dalits and the urban liberal) would still be with the party if they had the option of keeping Rahul (an untested product) on probation. Kejriwal and his team would also have done better outside Delhi with a probation period. Reducing the risk and uncertainty always results in enabling customers to make more informed choices, based on performance on-the-job rather than just go for the familiar.

A recall referendum can also reduce the use of money power in elections. Today candidates spend Rs 100 million on an MP election because they have an assured revenue stream of Rs 250 million from just the MPLADs program over five years. Even if 40% of this amount leaks (as against leakage of 75% in rural development programs once conjectured by Rajiv Gandhi), this ensures recovery of the capital invested at the time of elections. If a recall provision is activated within two years of election, the potential revenue stream gets reduced to less than the capital invested. The result would be that candidates would not splurge as much as they do today and reserve their financial arsenal for subsequent eventualities.

How difficult and cumbersome is it to embed the recall provision? The answer is not very difficult or expensive. Voters should have the power to recall their representative after two years of election but prior to two years of the next election (for a standard five year term). This ensures that the recall provision is used only once. Experience shows that the provision is only selectively used so the additional expense is minimal.

How difficult is it to operationalize the recall? Once everyone has a UID (Unique ID) and a linked phone (this is not far away and by 2019 both would be a reality), a digital referendum can even be initiated on phone with a simple yes/no option by any interested group of voters. If 50% plus 1 voters vote to recall their MP/MLA the Election Commission, after verifying the genuineness of the digital referendum, would initiate the re-election process.

Why hasn’t this happened already? Some fears are justified. After all the majority of potential MP/MLA candidates are “arbpatis” (asset value above Rs 1 billion) valued at current market prices rather than historical or depreciated prices. With so much cash sloshing around in a poor country the assumption is that voters can be bought out by a rejected but rich candidate to force a recall referendum. This is possible. But there is nothing to stop the voters from voting for whomever they wish in the post recall election. They can thereby eat and yet have their cake. Many candidates who buy votes for cash encounter strategic behavior by voters.

But the most potent barrier to recall is the combined self-interest of politicians across parties against rocking their boat. Remember how they all bandied together against the Lokpal Bill; against disqualifying convicted criminals from remaining MPs and against audit of the books of parties? When the chips are down, functional and class interest dominates, as in any other profession. Politicos hang and sink together versus the issue of empowerment of citizens.

Of course voters should look before they leap and the principle of caveat emptor prevails. But “poverty is the biggest polluter” (Indira Gandhi 1970). Illiteracy, living on the razors edge and the absence of human dignity, are cousins of poverty. Can we really expect anyone in that situation to be able to rationally choose an MP without making mistakes?

What about frustrated voters exercising a virtual NOTA vote by voting in a fresh face (Kejriwal?) hoping against hope that he would be better than the known devils? Should such voters continue to suffer for five long years? Everyone has the right and the obligation to change their minds. Even the dacoits of Chambal were rehabilitated because the State gave them a “second-chance”.

We should apply the “second-chance” approach to electing representatives. If Toyota- the gold standard for automobile quality- can make mistakes and recall cars, voters are only human and they occasionally err.

Team Modi; the first 100 days

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Come May 16, Team Modi will be “riding” into Delhi in a triumphant explosion of fireworks, marigold and rose garlands and ladoos (sweets). After the celebrations are done; the flags and caps given away to raddi and the posters hang limp and ragged, Modi will get down to implementing his manifesto and try to outdo Kejriwal’s frenetic 49 day blitzkrieg.

Elections are to a democracy, what war is to a Nation. Our elections tend to highlight the innumerable cleavages in society, some of them exceedingly bitter, which get papered over. But once in every five years we get to “ground truth” how far we have come in integrating ourselves.  The answer for 2014 is not very far. The bitterest divide and mutual suspicion is between Hindus and Muslims followed by between Dalits and the rest. Modi will need to act expeditiously on both.

What matters most to both social segments (Muslims and Dalits, both of whom are “outsiders” to the Hindu mainstream) is security of life and property and jobs.

Security is a matter squarely in the mandate of state governments. But there are some things the center can do.

First, appoint a BJP Home Minister who has a track record of plurality and a persona which encourages reconciliation and compromise, rather than confrontation. Arun Jaitley fits the bill. Second, ramp up the activities of the Intelligence Bureau. The IB operates nationally and can gather and report intelligence for prevention of organized crime and sectarian violence. Third, use the constitutional provisions to act against a state government, which ignores early warnings from IB and fails to protect its citizens against organized crime and sectarian violence. Fourth, fast forward the UID (Aadhar card). It is the best available mechanism for seamless digitization of an individual’s identity across the country; the prevention of duplication and verifying identity irrespective of the current location of the holder.  

A caveat here. As in business, there is no substitute for credibility and no better measure of good intentions than ones actions. Amit Shah, a close confidant of Modi, must not find a place in the cabinet. Shah was invaluable for his organizational skill to topple the old paper tigers of the BJP in UP; Lalji Tandon (Lucknow) and Murli Manohar Joshi (Varanasi) and keep a close watch over the faction ridden activities of the party in UP. His job is done and he must recede into the shadows of Gujarat.

After security comes the more uphill task of providing productive jobs. Jobs are the outcome of investment and inclusive growth, both of which the BJP manifesto focuses. An important keystone of growth, which has received less than deserved attention, is making government more effective; re-energizing babus to become performance oriented and reshaping the architecture of the central government. Here is what Modi can do in the first 100 days.

First, reassure the babus in Delhi; Joint Secretary upwards, numbering around 1000, that there is no retribution coming merely because they worked closely; were appointed or promoted under a UPA government. To build trust and camaraderie, the PM must view this set of babus as his personal executive team and be inclusive though his actions. Selection; performance review and most importantly grievance redressal, including regulated but direct access to him for senior babus, must be the PMs prerogative. Nothing works as well as even the briefest face-to-face interaction between a babu and her boss (even through face time at 5.30 am!) to build mutual commitment and confidence.

Second, Modi must act quickly on his promise of treating all the Chief Ministers of state governments as an integral part of his “development” team. The bad mouthing and name calling of the election must get subsumed by a common purpose for mutual gains. The key sticking point here is the manner and the proportion of finances which get distributed as central grants and loans to states. The proportion of central finances shared with the states can increase significantly, in real terms, if the center cuts back on the burgeoning central sector schemes which are devised in and financed by Delhi, but implemented by states. Modi needs to walk the talk here. He must transfer direct decision making power, including design discretion, to the states, subject to mandated and specific inclusion by states of local governments in the implementation of such schemes.

Third, quickly restructure the central government into a more cohesive team with adequate executive support for the leader. Nothing works like evoking symbols to illustrate purpose. Under the previous PM, the Planning Commission grew to become his de facto PMO for matters economic. This will no longer be necessary with a “real” PM in position. The Planning Commission should be merged into a Ministry of Economic Affairs; an internal economic think tank of the government.

The functions of the “real” PMO should be expanded to include a Service Delivery and Development Unit reporting directly to the PM. This unit would be mandated to problem shoot in strategic areas; work with Ministers to find solutions to clogged service delivery channels and straggling central projects; monitoring progress digitally in real time and generate an independent MIS for the eyes of the PM only.

This strategy of choosing specific problems to solve in delivery chains and then going after them hammer and tongs, rather than waiting endlessly for the more tedious all-of-government reform worked well for Tony Blair in the UK (the longest serving Labour PM) and more recently for PM Najib Razak in Malaysia for his re-election. Both interventions enhanced the efficiency and effectiveness of the government and subsequent electoral gains (UK -2005 and Malaysia-2013).  

Fourth, reduce the cost whilst enhancing the effectiveness of the central government. Ministries have burgeoned over the last decade to accommodate the “drift dharma” of coalition governments. The central government must be shrunk and ministries collapsed by broad banding related sectors;

(1) Combine the ministries of Heavy Industry; Steel; Chemicals; Industry and Commerce; Micro, Small and Medium Enterprises; Food Processing; Labour and Employment into one Ministry of Industry, Commerce and Employment.

(2) Combine the ministries of Urban development; Rural Development; Housing and Urban Poverty Alleviation and Drinking Water and Sanitation into a single Ministry of Development and Poverty Alleviation.

(3) Combine the ministries of Agriculture; Fertilizer; Water Resources; Forests and Wildlife and Earth Sciences into a single Ministry of Earth Resources.

(4) Combine the ministries of Petroleum and Natural Gas; Coal; Power and Renewable Energy into a single Ministry of Energy.

(5) Combine Road Transport; Shipping; Civil Aviation and Railways into a single Ministry of Transport.

Broad banding induces better networking and facilitates an integrated approach to problem definition and problem solving.

A more significant political advantage of broad banding is that it provides around ten significantly empowered Ministries (including Home, Finance, External Affairs, Human Resources and Health) to accommodate the senior BJP ranks who are currently smarting at their marginalization by the relatively younger Team Modi. Broad banding also allows junior BJP members to be inducted as state ministers for maturing into a line of succession.

The first instinct of a new government is to rush about fulfilling the “promises” made by them in the heat of the electoral battle. This is the glamorous thing to do, which gets instant acclaim both from the media and the citizens. But someone must do the back room drudge of repairing the plumbing; tightening the screws and fixing the nuts and bolts. There is little point in the Captain inviting the world to a deck party, if the waiters are sullen; the canapés indifferent; the boat leaks and the toilets stink. Time to pull the jhadoo out of the closet and use it vigorously.   

The yin-yang of Indian democracy

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Why has anarchism become a fashion statement? Is it an early warning sign of the fracturing of the edifice of liberal democracy, built up over the last century?

Parliaments are held in contempt now with their membership dominated by lumpen elements that are there to expropriate public resources for private gain. Citizens trust nothing except the decisions they take themselves. Representative democracy is passé. Direct democracy is in. Parliamentary democracy and cabinet functioning is out. Strong man rule is in.

If political architecture is under stress, economic management principles are in severe distress. In the bastions of Western liberalism there are deep reservations about the sustainability of the smart economic solutions of the last five decades. Jobless growth is not what was targeted but it is the reality. Increasing inequality was an unintended outcome of rapid growth. The unmasking of limitless human greed continues to shock. The moral turpitude of those paid handsomely to be in positions of financial and political trust seems to have no bounds.

In the 1950s and 1960s we put our faith in planned public expenditure financed by foreign aid and debt to pull us out of the poverty trap. Poverty remained with us.

In the 1970s we fingered big business as the villain and put our faith in public enterprises to provide jobs. Instead we built a small molly coddled labour aristocracy and stamped out India’s entrepreneurial exuberance, whilst distributing the stagnant economic pie in ever thinner slices.

In the 1980s we put our faith in dismantling the complex system of government controls which were strangulating industry and trade. We found that whilst this was an adequate strategy to give “escape velocity” to small, island countries, large economies like India needed deeper domestic reform.

In the 1990s and 2000s we tried to jettison structural inefficiencies and segmentation in the labour and financial markets, liberalized the external account and kick started private infrastructure development and this worked well. In the 2010s we tried to do more of the same and it stopped working, partly because the world had slowed down, partly because we had run out of reform steam.

We are drifting now into an electoral storm in 2014, bewildered, lost and directionless, stumbling over the discarded political shibboleths of the past and feeling our way across the new crevasses in liberal economic thought.

The rise of Modi and of Kejriwal illustrates this discontent with established doctrine. The appeal of both leaders cuts across traditional vote banks of caste and class, though Modi is more constrained by his “Hindudtva” image on the issue of religious pluralism.

Elites are not comfortable with either leader because they sense in both the desire to smash the status quo, built assiduously over the last six decades, ensuring elite appropriation of public resources for private gain.

It matters little to Modi’s supporters that he does not pay lip service to “secularism”. Similarly it matters not a jot to Kejriwal’s supporters that he defies established principles of good governance in economic management by subsidizing energy and water and generating regulatory uncertainty for private industry and finance.

Neither set of supporters really care that both leaders are openly autocratic and self-opinionated and that neither has much time for the niceties of bureaucracy and traditional political decorum. The bottom line for their supporters is that the established doctrines have not served them well and so they are willing to dive into the deep end with their eyes closed.

There is a new, harsh political reality out there. Gandhi’s principles have been spurned and today the ends justify the means. Gandhi’s instruments of social mobilization however are much in demand; personal contact with citizens, effective communication in a familiar idiom instead of hectoring; a heavy reliance on personally walking the talk and never getting too far from the “nautanki” format of public discourse, so popular in India.

Cynics would call this “lumpenisation”, the demise of all that was good and proper in Indian democracy. Realists would argue that till the masks are ripped away and the ugly reality underneath revealed, there can be no reconciliation and no change. In politics, genuflecting to liberal democracy in public whilst working to deepen the roots of mutually exclusive traditional identity groups, as captive political vote banks, has been the hypocritical norm.  

Liberty is achievable only when the masks we habitually wear, of caste, class, religion and culture are ripped off and an honest conversation started, amongst ourselves, of how we can get ahead.

As the battle lines are drawn for 2014, it is useful to be mindful that every Modi juggernaut needs a Kejriwal to keep the collateral damage of an overwhelming majority in check. The rule of the multiple of 10 can be useful. If Modi corners no more than ten times the seats Kejriwal gets, it will ensure that the rest will group themselves around these two nuclei; both of whom are progressive and compatible yin and yang.

 

God and Inclusive Growth

 

Indians are born believing in God but get initiated into inclusion and growth. Conversely, Westerners are born believing in inclusion and growth but end up becoming devotees of God on reaching India. This illustrates how the two beliefs converge if citizens have the freedom to choose.

Can the devotion that God inspires be evoked for the State? The example that comes immediately to mind is of Indian soldiers spilling their blood for the nation. Overcoming the instinctive desire to save oneself is an outcome of intensive training; peer pressure; personal loyalty to the group and role model type leadership on the battle field.  This is accompanied by close, often, quite intimate, habitation and isolation from the external non-military environment and of course the harsh disciplinary regime to which everyone is subjected.

Despite Arnab’s helpful interview with Rahul yesterday, the nation continues to pin its expectations on Modi’s India and Kejriwal’s Delhi. Once Modi is PM, the expectation is that India will fall in line. Politicians will be disciplined to cease making a sorry spectacle of themselves. Babus will become decisive and diligent. Citizens will become responsible versus their duties and responsive to the needs of others.  

Modi himself is certainly an exemplary role model of growth; an inspiring story of an individual who used institutional mechanisms to break through caste and class bonds to touch the sky, though he could have done a better job of taking all his soldiers along, rather than just most of them. Kejriwal speaks for citizens, across the fault lines of religion, caste and ethnicity, when he fingers corruption and elitism as the enemy.

Translating these worthy objectives into results however requires a huge social transformation.

First, citizen duties have to trump citizen rights, as in China, so that community harmony trumps individual preference. The East Asian flying geese pattern is aerodynamically beneficial, but only if the gaps between the geese are strictly regulated. This goes against the egotistical grain of the “Argumentative Indian”.

Second, to make more palatable, the erosion of private rights and the enhancement of private duties, powers and resources would need to be transferred to participative local communities rather than centralized in remote governments. Community empowerment is incidentally healthy for minorities since they tend to locate themselves cohesively. But this will upset established elites feeding off centralized powers.

Third, if justice is to be speeded up our judicial system which presumes innocence till proven guilty, shall need to be replaced by the presumption of guilt, till proven innocent. Our system favors rich and powerful criminals (barring exceptions like Tejpal and Raja), who can get bail and stretch out a case endlessly, whilst the poor remain incarcerated in judicial custody as under trial prisoners

Lastly, every leader needs a vertically integrated and empowered party cadre, which becomes her eyes and ears (as with Didi, Amma, Bhenji or Netaji) but the cadre can undermine the constitutional arrangements for oversight (executive, judiciary and legislature). Modi doesnt have a party he can trust. Kejriwal doesn’t have a party.

Despite the likely political and social upheavals from such difficultagendas, it is astonishing how popular they are with the electorate. Kejriwal would win 60% of the votes in Delhi today and is likely to get around 20 seats in the Lok Sabha polls 2014. Modi is set to sweep the 2014 polls.

This illustrates that India may be ripe for a social makeover, loosening forever, our tenuous strings to the colonial heritage of processes for fair play and equity and political architecture.  This model has not lived up to expectations.

Formal political plurality has morphed into elite control of identity groups rather than into parties espousing different visions for implementing the Directive Principles of the Constitution. High caste Hindus, Muslims, Sikhs, Jats, Kurmis, Ahirs and Dalits with sub clans at local levels, ethnic and linguistic groups all jostle for their share of the national pie. Perversely, as in Egypt, the right to choose ones representatives has resulted in governments divorced from the tenets of liberal democratic thought; liberty, equality, fraternity.

The scale of corruption has exploded post-liberalization in 1990.  Russia, India and China are all threatened by unbridled corruption, as the rigid State apparatus for managing the economy is peeled away. Apologists, of the Washington Consensus kind, would say that there is no net loss since what is corruption today, was State inefficiency, previously. They would point instead to the gains from the growing pie and reduction in poverty.

What they are unable to explain however, is why the World is more unequal today than in 1990? Why is it that more than 50% of the benefits of growth go to a miniscule segment of the creamy layer not deeper than 1% of the population?  What indeed are the limits of greed in India?

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Audi, Mercedes, BMW and other super luxury brands (each car worth between INR 4 to 9 million) sold more than 20,000 cars in 2013. But there are only 44,000 taxpayers with a declared annual income of INR 10 million or more. Only around 400,000 people pay tax on an annual income of above INR 2 million.  Wealthy Indians may be privately generous but they hate to share their wealth with the State and no one thinks any the worse of them. Indeed, the salaried employee is pitied because she has no avenues for evading tax. Compare this with the 1962 war when even middle class women donated their gold to help the nation fight the Chinese. Our moral fiber has weakened.

If Modi and Kejriwal fail to address the core issues of moral fiber in public life, they shall fail to achieve many of the goals they set themselves. The first test of moral fiber is for the leader to come clean before the citizens. Confess your failings. Share your good deeds. Speak the truth and act upon it. Limit your needs. Seek to benefit citizens not identities. That is the only way to reach God and inclusive Growth simultaneously.   

Najeeb Jung shines

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By offering soft, warm, paranthas to Kejriwal to call off the AAP dharna, Jung, the new Lt. Governor of Delhi, has not only raised the culinary standards for political parleys but acted in a manner aligned to the high office he holds.

In sharp contrast is the behavior of the Government of India’s Ministry of Home. Leave aside the intemperate description of Kejriwal as mad by its minister…which Kejriwal, being Kejriwal, may well be willing to accept, in the same manner as he gladly accepted being termed an Anarchist. It is a sad reflection of how rusted the “steel frame” has become that apparently  the babus in the Ministry felt that Jung jumped the gun; that they could have “tired” Kejriwal out; that an “olive branch” of sending two cops on leave was an unnecessary concession.  

The problem with the Babus of today is that they cannot draw the line between the political objectives of their political masters and the obligations of the post they hold. It is not the job of the Home Secretary to improve the image of the Congress or rubbish that of the AAP. It is not the job of the police to promote political agendas.

Unfortunately, such fine distinctions between public responsibility and private gain are long gone and babus align with one or the other party to get ahead.

Till the proliferation of the Commissions, since the late 1990s (which are overwhelmingly staffed by retired IAS officers and judges), the highest prize a retired official could aspire for was becoming a Governor of a State. Unlike the President who has to be elected by Parliament a Governor is merely appointed by the Central Government; a safe non transparent process used for accommodating babus in possession of embarrassing secrets of netas; quid pro co for loyal services rendered in the past to political masters; parking slots for politicians past their expiry dates and such like. The net result is all incumbents of the post of Governor are agents of the central government. Two such ex-babu Governors are now media breaking stories because the CBI has sought the Presidents clearance to question them in the sorry story of the mis-procurement of AugustaWestland VVIP helicopters.

Governors, in general, are meant be benign observers, like the Queen of England. They don their Durga avtar when the Central Government decides to declare a state of emergency and dismisses a State Government. Effectively this transfers all powers upwards to the Central Government, which rules through the Governor.

The last time this happened was in 2002 in Uttar Pradesh. Mercifully, since then, the coalition dharma at the center has protected those on dharna from being summarily excluded from political power by the President.  

In Delhi the Lt. Governor rules directly since the Police and the Land Administration is with him nominally and actually, closely controlled by the respectively, the Home Ministry and the Ministry of Urban Development/DDA. The two powers are inextricably linked. Land and property is the safest and most lucrative refuge (with better returns than the stock market) for the loot from corruption.  You protect your wealth, power and status by controlling the police. It is no coincidence that till the Supreme Court directive the largest limousines had lal battis. The Lt. Governors real power comes from how close he is to the person calling the shots in Delhi.

Najeeb Jung may have acted on the direct orders of 10 Janpath, or its ancillary offices. However I prefer to believe that Jung acted out of a deep sense of responsibility, maturity and convention, in keeping with the sophistication his position requires.  Jung is here, with us in Delhi, till at least the election results are known. This is not the last dharna or street action he will have to deal with. It makes eminent sense for him to reach out to Kejriwal and establish a sense of trust and fair play with him. A democracy is functional only if political parties collaborate. We have not seen good examples of positive and responsible collaboration in the recent past. This is one shining example of the correct approach.

Jung has been a babu, an international civil servant, an academician and an actor. By his “warm parantha parley” approach, he has finally crossed the line and become a politician, whilst simultaneously remaining the gentleman and aristocrat that he is. This may, incidentally, also ensure his continuance as the Lt. Governor, even post 2014, since even handed and level headed Governors are scarce to come by. Who says God doesn’t reward good acts?

 

 

 

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