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Why the BJP will lose- Delhi State elections 2015

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(photo credit: freepik.com)

There are three reasons why the AAP shall succeed in holding off a BJP government in Delhi.

BICKERING IN THE DELHI BJP

First, the debilitated state of the Delhi BJP unit for which the malfunctioning mike at PM Modi’s election rally on January 10, 2014 was an apt metaphor. PM Modi or his alter ego Amit Shah have not had the mind space to redress what ails it: intra-fighting, lackluster leadership and just sheer inefficiency. These short-comings do not go unnoticed by the demanding and discerning BJP supporters in Delhi. They showed how lukewarm they were during PM Modi’s recent 10th January election rally in sharp contrast to the upbeat mood, way back in March 2014, when Modi first rode into Delhi as the BJPs PM candidate.

In contrast Kejriwal and his team are a chastened lot- apologetic about their earlier blunders; better honed for politics; eager to please and reach out to Delhi voters with a campaign strategy of individualized and personal interaction and long term relationship building which appeals instantly. With the Congress in retreat and tacitly backing AAP-their ideological ally- an AAP surge is certain.

SAFFRON SELF GOAL

Second, the aggressive Hindutva campaign and the indiscipline of the saffron clad BJP ranks, who frankly sound like they belong in the 18th century, with their calls for increasing the production of Hindu babies; a return to the “traditional” subservient role of women in Hindu families and the obsession with religion. India is a religious country and most Indians believe in God and practice a faith. But we do not want to impose our faith on others. Nor do we want others to impose theirs on us. Mutual respect with complete freedom of choice for believers is the Indian social mantra of long standing. All faiths proselytize. But it does not have to be done in a grandstanding and confrontationist manner designed to make headline news. True and efficient Missionaries do not try and get brownie points by advertising what they do.

Departing from the development script immediately risks losing the minority- read Muslim 12% and Christian 1%- vote entirely and alienating intellectuals, secularists and educated, aspirational women and a large segment of the upwardly mobile youth. This is the “self-goal” that the saffron clad leaders of the BJP have scored.

Some also read into this irrational indiscipline of the saffron clad crowd, the invisible hand of the wise men in Nagpur- the RSS.  PM Modi is very much his own man and not the typical RSS acolyte who will allow fuzzy theology to trump real achievements or threaten medium-term National objectives. His agenda is clearly development and this is what got him votes in the 2014 national agenda. He has gone from strength to strength and in the space of a mere one year, has become the sole voice of the BJP/RSS. Nagpur could not have liked that.

More importantly, those, over whose heads PM Modi elevated himself, have an axe to grind and an incentive to undermine him. Ensuring the BJP loses the Delhi poll aligns with this perverse objective.

MISALIGNED AGENDA

Third, the BJP has not reduced its image handicap of being perceived as the party of the rich. The erstwhile refuge of the poor-the Congress- has slipped into oblivion and that mantle has squarely been grabbed by Kejriwal. But it is not just a matter of perception.

The poor-the foot path vendor, small shop keepers, “auto” drivers, retired folk and Dalits (25% population) remember with nostalgia, the short reign of Kejriwal when he cracked down on the widespread petty corruption at the public interface level. In contrast the over 200 days of indirect governance by the BJP Union Government has seen an upsurge in petty corruption and disregard for the poor and the powerless in the Police, the Public Service Departments and the Municipal Corporation.

WHY SHOULD BJP CARE?

How big a blow will it be for the BJP to lose Delhi? Far from bemoaning this outcome the BJP should want to lose this election. There are three reasons for this contrarian view.

First, AAP is likely, at the very least, to be the main and significant opposition. The BJP will be hard put to keep up with the forensic oversight the AAP would unleash on the functioning of a BJP government in Delhi unless the Delhi unit is completely revamped. There is little chance of this happening since too much political capital needs to be invested for this with meagre political returns. This helplessness is best demonstrated by the inability of the BJP to reform the three Municipal Corporations it controls in Delhi. Hence the BJP has very little upside to lose in Delhi.

Second, an AAP government is likely to have the very same limitations it had when it last came to power; an uncooperative National Government controlling both the Police and Urban Development. Delhi is thirsting for more water but with a BJP government in Haryana (the source of additional supply) and a BJP National Government, an AAP government in Delhi will get no help in getting additional supplies. This indicates an AAP government is likely to underperform versus people’s expectations. So best to give them a long rope with which to hang themselves conclusively.

Third, PM Modi’s “A” team (Arun Jaitley-FM and Rajnath Singh-Home Minister) is getting awfully stretched. Big political battles are around the corner; Bihar end 2015 and UP a year later. There is also the job of getting on with routine governance; the nuts and bolts of managing the pipes that deliver public interest outcomes like investment; growth and jobs. Managing Delhi is a distraction the BJP could do without.

Of course the BJP does not have it in its DNA to take the low profile, strategic, sustainable path. Their forte is the “shock and awe” tactic. The focus is very much on glossy, big ticket items: grand new schemes and projects; a “strong Rupee; soaring stock markets; clever IT apps; outstanding oratory and a one-headline-a-day frenetic outreach schedule.

Time for the BJP to do a huddle and think its Delhi election strategy through. Having recently won the war (National Elections), losing a skirmish (Delhi) is ok if it results in winning the battle (Bihar & UP) to follow.

PM Modi’s second governance test

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Success attracts its own supporters. Narendra bhai epitomizes the success of merit and dedication. It is not surprising therefore, that supporters, including erstwhile critics, both national and international, are thronging his doorstep for a darshan.

There are visible signs that the public adulation has not gone to his head. He has shot down an attempt to curry favor with him by BJP governments, by revising the textbooks with a chapter devoted to him as a role model. This is very welcome and good news.

But a big governance test will confront him over the next two months.

Can he support the Finance Minister deliver a “realistic” budget which does not fudge either revenue receipt or expenditure- two favourite tricks of budget managers to fool the public, adopted by the UPA2 in its last budget? Second, can he reduce the fiscal deficit below the level of 4.9% in 2012-13; the last “normal year” data available. The Fiscal Responsibility and Budget Management Act 2003 targeted a maximum Fiscal Deficit level of 2% by 2006. We never achieved that level. The best was 2.7% in 2007.  A plan to reach close to this over the next 3 years, by reducing it by 0.5% point every year is sorely needed.

Growth fundamentalists will shout that this is retrogressive. His advisors eager to “kick start” the economy and show dramatic results will advise him to throw fiscal caution to the winds and spend his way out of the economic downturn. But none of the growth fundamentalists can guarantee that “kick starting” growth by public spending actually adds jobs for the poor. Indeed the evidence is adding up to quite the reverse conclusion. Public spending windfalls (as in the Common Wealth Games), line the pockets of the top 1% of Indians, whose business margins soar and of shareholders, whose equity capital appreciates (on which there is no tax at all!). But the impact on jobs is likely to be lagged or minimal.

Narendra bhai’s best bet is to listen to his RBI Governor who is the protector of the poor and the salaried middle class, against the ravages of inflation. The PM should let the RBI Governor set inflation management targets and measures, without restraint. This approach is not sexy, stodgy and reminiscent of IMF style fiscal fundamentalism.

But the short term strategy of boosting the stock market and growth numbers through massive public spending, would be dangerously negligent for an economy, like India, where over 60% of the people are poor, unskilled and live mostly in rural areas and are unable to access jobs in the market economy. For 40% of the people living in urban areas, who are poor, inflation is a bigger calamity, because wages are stickier than prices.

Unearthing black money is being considered as a revenue earning measure, which could painlessly increase the spending power of the government. It also sounds like a “win-win” solution since it responds to the high moral objectives of good governance.

But Narendra bhai, must consider that, Black Money is the lubricant, which keeps the economy ticking today. There are more than 300,000 new, unsold flats clogging the inventory of builders and investors because growth prospects are uncertain. Much of the real estate boom was driven by Black Money fueled speculation, betting on high growth to keep the Ponzi scheme going. But the boom in construction activities did create jobs. A war on black money will directly impact any revival of the listless real-estate market, the economy and jobs. Timing is everything in successful governance reforms. Black money has many negative consequences. But the time to become like Denmark is in a boom, not during a bust.

There are no short cuts to fiscal stability. Cutting back on the governments wasteful recurrent expenditure (which comprises 80% of total expenditure); enlarging the tax base and better tax collection are key priorities.

In this context, good governance, would dictate that tough, unpopular decisions need to feed into the 2014-15 budget:

(1)    Target a real reduction in revenue (current) expenditure of 10% over the previous year. Over 50% of the current expenditure comprises interest payments and subsidies. Salaries account for only 8%. As a result, the wage bill is rarely targeted. But just by restructuring Railways into a corporation and the Postal Service into a bank and a corporation, nearly 50% of the wage bill can be taken off the public payroll. Other benefits from corporatization would also accrue.  

(2)    A majority of central government officials, including in the ministries of coal, power, steel, mines, oil and gas, chemical, fertilizers, civil aviation and telecom spend their time, second guessing, remotely managing or monitoring Public Sector Enterprises. This is a wholly unnecessary job. Transfer the lot of them to the concerned PSE. This will automatically reduce the size of most ministries. Appoint professionals to the Boards of these PSEs, instead of the “shoo-ins” we have today. PSEs are not the “jagirs” of the concerned administrative ministry. “Shoo-ins” are popular today, as Directors of PSEs, because the concerned Minister and the PSE management are comfortable with them. But they do nothing for improving the efficiency of the PSEs.

(3)    A second, large chunk of central government employees spend their time administering development schemes implemented by the state governments, but funded either wholly or partly. by the center (central sector schemes). These are wasteful tasks. Hand the task of monitoring such schemes over to NGOs. Send the concerned ministry officials to these NGOs on deputation and get them off the government’s payroll.

(4)    Cut back the long chain of command in Ministries. Today a file passes through at least five levels of scrutiny (i) Section Officer(ii)Under Secretary(iii) Deputy Secretary-Director(iv) Additional Secy.-Special Secy.(v) Secretary. This is way too long. The Secretary should be at most the third level dealing with a file and not the fifth.

(5)    Filter all incomplete and new projects for their private employment and poverty reduction potential. Fund only the ones with the best “social and economic returns” and review what to do with the “politically sensitive” but wasteful, other projects. Bridges to nowhere and empty but beautifully carpeted roads, are “pork”, not development.

(6)    Finally, target fitting the “core” ministries (External Affairs, Defence, Home, Finance, Power, Coal, Mines, Transport, Agriculture, Industrial and Urban Development, Social welfare and Women and Child development), into the space available in the glorious North and South Blocks, which was meant for them. Make space for them, by shifting the PMO into the Rashtrapati Bhawan complex, which is conspicuously vacant. Lease the vacated Bhawans, along Rajpath, to the private sector to earn additional revenue. This will also spare us the drab view of Soviet era, building blocks.

This is the nit-picky governance agenda which the UPA never attempted. A bloated central government, with lots of fingers pointing at each other, is not compatible with Narendra bhai’s ambition and our expectation of effective governance.

Achieving the Fiscal Deficit target for 2014-15 of 0.5% point below the 4.9% actual deficit in 2013-14 by reducing the current expenditure of the central government, is the PMs second test in governance.  

Rahul and Kejriwal; common aspirations

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In India, fractured as it is by multiple social divisions, on top of the usual economic distinctions of class, the notion that any one party can appeal to the majority seems far-fetched, especially in the context of an increasingly aware and literate electorate. Intelligent voters seek to maximize their self-interest, which is increasingly defined in a narrow manner.

Despite its divisiveness, India’s electorate can be grouped into three broad segments.

First, the Muslims, the Dalits and the Tribals remain marginalized local groups, comprising around 33% of the vote. This vote remains pretty much transferable in bulk to whichever party they trust. The rise of regional parties is based on this vote. For the marginalized, the primary concern is the security of life, property and social dignity. These immediate concerns are best met practically, by the party which rules the State government, where they live. They also believe that caste/religion cohorts will be less rapacious than others.

The Congress used to be the party of choice for them, but the loss of power at the State level, particularly in North and East India, has severely undercut its usefulness to these marginalized segments.

For none of these, though the BJP has broken through to the Tribal vote, is the BJP a welcome prospect. Its strident Hinduism disadvantages lower castes, whilst its vision of business led growth, paints it as vile, exploitative and people unfriendly. This effectively knocks around one third of the electorate into the arms of regional parties, the Left and the Congress (where it rules a State government).

Second, the urban non-poor, comprising around 20% of voters, remain catchment areas for the BJP and its clones. The urban poor, comprising around 10% of the vote, were solidly with the Congress till 2013 but now may gravitate to AAP clones, if these are scaled up, although this seems unlikely given the past history of such “honesty based” social movements.

The third group is the rural, rich and business community, who are increasingly becoming indistinguishable from the urban rich, since untaxed agricultural income remains an attractive instrument for accounting for unaccounted income. Also agricultural land is a prime speculative asset in a fast urbanizing economy. This group, which hangs its hat on the movements of the Sensex, is firmly with the BJP. But their numbers are woefully insignificant (less than 1% of the vote).

The rural poor (other than scheduled caste and tribes), comprising the residual 36%, are the votes which remain up for grabs by the National and Regional parties. Caste, Clan and Community all play major and enduring roles.

If the Left had a more credible jobs and public services program, this segment would be fertile ground for it. The Congress and the Left have now become virtually indistinguishable. They have similar approaches to gay rights versus traditional values; social protection versus growth; subsidies versus jobs or domestic agendas versus open economy linkages. The only difference is that the Congress is not averse to playing the caste and religion card, as convenient, whilst the Left is still squeamish about departing from its class struggle agenda.

These two parties are likely to cannibalize each other. They could usefully coalesce into a single “Progressive Union” of the rural poor, Muslims, Dalits and Tribals. In doing so they could aggressively combat the Regional parties which are essentially caste and social identify based. They could give a modern, welfare State option to this segment. The AAP is also closely aligned to the philosophy of the Left and the Congress. Strident secularism; worker welfare; self-sufficiency; decentralized rule by mohallah committees/Bhagidari/communes are examples of common thinking.

The BJP is consequently forced to distinguish itself as the Party offering pan-India economic growth, industrialization, rapid urbanization and jobs, whilst minimizing its Welfare State character. It has quite some way to go towards this objective. Its 2013 victories in Chhattisgarh and Madhya Pradesh were based on a social welfare program, closely resembling that of the Congress and were aided by poor leadership and in-fighting in the Congress. This cannot be a consistent ground for victory. A combative Congress could swiftly reduce the BJPs advantage at the “efficient government” game.

The BJP has to look to the rural rich and upwardly mobile middle class and the urban voter for long term support. This segment will grow from being 30% today to over 60% of the vote by 2030. This is its natural constituency. In doing so it must distance itself from Hindu fundamentalism; obscurantism and adopt a modern growth and development based agenda. The Nagpur connection has to be severely diluted. Otherwise it will lose ground, which it can ill afford.

There is little scope for Fascism in India, principally due to deep social and regional heterogeneity. The Parties of the next decade will be smaller in size and scope. They will live or die depending on how nimble they can be in reaching out to their voters. Close and consistent interaction with voters, rather than mammoth public rallies, will determine success. Merit based on performance, rather than birth, shall increasingly be the measure of politicians. Governments will be formed by coalitions rather than through block buster electoral support.

Kejriwal has belled the cat. The Congress, which is in search of a leader, could usefully anoint him as its 2014 candidate for Prime Minister.  Rahul and Kejriwal share a lot of common ground; age, social conscience, a thirst for asceticism and a focus on doing the right thing. They should join hands. What could be better than contracting-in the model, Rahul hopes to emulate?  Another, more revolutionary option, would be for Rahul and the progressive section of the Congress to merge with the AAP. Either model can work, in stemming BJPs juggernaut.

Land Bill: political gains, future losses.

The Land Bill 2013 is backward looking and shortsighted. Coming  119 years after the predecessor legislation in 1894, it fails on four counts.

First, it does nothing to assure citizens that it shall rein in wilfull and unnecessary acquisition of property by the State, as has been happening in the past.  Consider that there are many Public Sector Undertakings which own land far in excess of their needs, as do the “new age” power plants which have been given coal mining licenses. The Bill actually skirts around the issue of “when and how much” is it justifiable for the State to acquire property. It focuses only on the process and amount of compensation to be paid in the event of acquisition.  It is curious therefore that it is being lambasted by industry as anti-industrialisation, not because of the higher amounts they may have to pay for land, but on account of the anticipated delays and increased bureaucracy now proposed in the process. The Bill proposes to artifically enhance the price paid for acquisition to give the disposed a fair compensation and possibly also act as deterrent to “deep pockets” from acquiring and holding large tracts land. The deterrent is over estimated. Land ownership has an average ROR of above 25% per annum which will continue to attract investments on account of its scarcity value. The provisions for enhanced acquisition price are populist and are likely to be ineffective in ensuring that only minimum volumes are acquired. The only way the volume of acquisition can be rationalized is by severely restricting the definition of public purpose to the needs of Defence and Security. The Right to Property is an essential part of empowering the ordinary citizen versus the State, which is ignored by the Bill.  Opposition should have come from the BJP and other rightist parties but “industry wallahs” typically like an interventionist State (like China or Vietnam) if it intervenes on their behalf. it is election time and all are wary of upsetting either the “poor”, “industry” and “real estate” wallahs. The pro-poor “lobby” essentially has a “left leaning” mindspace. For them, owning property is equivalent to being an oppressive, extractive, arrack swigging, landlord cum money lender.  This is a politically attractive stereotype, which all parties publicly bow to, never mind that atleast 90% of the population owns land and property. Why not use the Bill to define this Fundamental Right better and proscribe the powers of the State? We are losing a historical opportunity.

Second, the Bill displays an unerring faith in the bureaucracy and its ability to protect the rights of the poor, manage a complicated acquisition, participation, resettlement and rehabilitation process efficiently, despite all the evidence to the contrary.  Citizens today want a simplification of administrative procedures, not additional miles of red tape. The more the red tape, the more time it takes to get things done and higher the transaction cost, for getting files moving. The Policracy must rise above its class interest and declog administrative processes, not add ever more onerous procedures. Current estimates for completion of the new land acquisition process is a full five years! Only a policracy with a faith (or a vested interest) in an “interventionist” bureaucracy could impose this on citizens.

Third, the Bill shows the medieval mindset of the “policracy” under which industrial and infrastructure development and service delivery were a preserve of the government or of public sector undertakings. Hence land acquisition for private educational institutions, private hospitals and private hotels are all excluded from the definition of “public purpose”. The very same institutions if owned by the government or a PSU would be eligible. This approach runs completely contrary to everything the government has said about the criticality of private investment in infrastructure and service delivery. It confers on government the near unique ability to aggregate land in industrial volumes and then to use this leverage to enter into Public Private Partnerships with industry. The opportunity for extracting “rents” is obvious with the well known downstream consequences of fraud and corruption.  Medievalism is also evident in the requirement that there should be no change in ownership, post acquisition of the property, without the approval of government. Presumably, this is to discourage businessmen, who are “fast track approval getters”, from becoming middle men, in the real estate game. However this is a very restrictive condition for the genuine, medium level, private investor. An investor wants “full” ownership over what she has bought. This includes the right to transfer when considered appropriate. Having to go back to the government, cap in hand, just perpetuates the “license permit raj”. Once the Socio Economic Assessment and the Expert Group are satisfied with the “public purpose” and reasonableness of the project, it hardly matters who the owner is.  Despite all the high sounding support for the private sector, and the bon homie with government in CII and FICCI events, businessmen continue to have the stereotyped image of exploitative, manipulative, stingy but high living, low thinking, self seekers. This Bill reinforces that image. 

Lastly, the Bill is well intentioned in recognizing that the alienation of land can result in hardships for a larger group than just the owners. These are those whose livelihoods were dependent on the land continuing to be used for the purpose it was, till the time of acquisition. Whilst unquestionably appropriate, from the equity perspective, the problem here is the implementability of the proposal. The low ability to identify those eligible, with the robustness required, in the absence of records of informal labour  and the potential for flagrant misuse and cost inflation are obvious deterrents to efficiency and effectiveness in implementability. Are we creating an unenforceable entitlement here for workers, which may actually dissuade farmers from using labour as in the case of industry?

It is tragic that a well intentioned Bill is turned ineffective and counterproductive because of the timing of its introduction. This is a part of the pro-poor pre election bonanza that no party can afford to distance itself from. It is consequently ill intentioned, disruptively regressive and anti-poor by being pro-bureaucracy, anti-efficiency, anti-investment and anti growth.

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