governance, political economy, institutional development and economic regulation

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Book review: Tharoor, An era of darkness

tharoor

Shashi Tharoor’s latest book originated in a debate at Oxford on whether Britain should pay reparations to its erstwhile colonies. The YouTube clip of Tharoor systematically demolishing the opposition, his brilliance evident in the thrust and parry of debate, has been watched by more than three million viewers. But the author says he felt a “moral urgency” in informing the “layman and students” in India and in Britain, about the “horrors” of colonialism and hence this book.

The book is conveniently divided into eight chapters. Unusually, each is virtually self contained though each focuses on specific topics, as for example, the extent of the loot; dividing, rather than unifying India; subverting Indian diversity in ersatz modern British institutions; the policy of divide and rule; the absence of enlightened despotism et al. Whilst this stratagem of comprehensive rendition adds to the length, it facilitates selective, speed reading. There are also 295 helpful references to other works—both Indian and foreign, a veritable treasure trove.

The Raj – long on loot short on local benefits?

The author deploys the familiar nationalist tactic of talking up the wealth and virtues of pre-British India, while playing down the inadequacies of much of post-independence India, to book-end the “horrors” of the Raj. The benefits from the Raj are dismissed as few and that too, unintended, barring the development of a pan-India modern press and media; development of canal irrigation; scattered electrification of towns; and of course -the railways. Oddly, the planning and building of regulated, urban settlements for the British, expanded versions of which, subsequently, also became the refuge of India’s political, business and professional elite and in less oppulent versions for India’s middle class, goes unacknowledged.

The “loot” neither began nor ended with the Raj 

The litany of colonial woes is expectedly long. Nothing attracts instant attention more than stories of loot and rape inserted early on in a book. The British drained 8 per cent of India’s GDP as per Paul Baran’s 1957 estimate. Annual outflows are separately estimated by William Digby at 4.2 billion British pounds during the 19th century. Extrapolating this trend onto the first half of the 20th century, the additional outflow was 2 billion British pounds. Huge as this cumulative sum seems, consider that Indians themselves are estimated to have amassed $500 billion of illegal wealth abroad in less than seven decades of India’s independence as per the CBI in 2012. Consider also, that against the less than 10,000 British subjects employed in India, the Report of the Indian States Committee of 1929 lists a total of 562 princely states, each with a retinue of vast numbers of relatives of the ruling family living off the state treasury. There is no corresponding account of how much these effete rulers and their families cost the ordinary Indian.

maharaja-bhupinder-singh-patiala

Indian Maharajas delighted in maintaining humongous households and extravagant habits – and why not, since the aam admi paid for it all.

Yes, the British used India as a source of capital and raw material for their industries, which stilted Indian industrial development. Yes, they helmed organised commerce in India via the Managing Agencies. But just as surely, Jamshedji Tata’s dream of establishing a modern steel mill saw fruition because British India guaranteed the off-take of steel and built the railway to link the steel mill with raw materials and markets, thereby making it India’s first Public Private Partnership.

tata-steel

Jamshedpur, 1912: The first steel ingot is rolled 

The author cites the regulations forcing Indian mills to produce only British Specification Steel as a low stratagem to make them uncompetitive. But it could also be viewed as the first step towards internationalising standards in Indian industry. Not producing to international standards was our failing till we liberalised industry and opened our markets to competition in 1991.

The Raj was neither elightened nor did it serve a moral purpose

Of course, the British, as a colonial community, were rapacious, openly racist and self-serving. But the evidence is thin that they were any worse than the long line of Indian rulers that preceded them. Admittedly, it mattered where you lived. The princely states of south and west India were generally better managed and more progressive than those in north and eastern India.

Colonial consequences: The death of institutionalised privilege & rise of the new middle class

Tharoor’s view that neither the political unity of India nor the adoption of democratic norms was a direct outcome of the pan-India political architecture of the Raj is inadequately backed up with evidence. The mere fact that Arabs refer to all Indians as “Hindi” is hardly evidence that pre-British India was already integrated. By this logic, all those living south of the Vindhyas are “Madrasis” because that is what ignorant North Indians called them and all of Arabia is one because we refer to people from there as “Arabs”.

The author ignores the greatest accomplishments of the Raj—the decimation of the old order of inherited privileges and rights; kindling of the spirit of democracy and incubation of the great Indian middle class via government jobs in the railways, the army and in civil governance.

Prime Minister Indira Gandhi, by abolishing privy purses in 1971, ended what the British began—the consigning of India’s numerous Maharajas to the dustbin of history. By institutionalising the common law and opening up vacancies—admittedly too few—at the very top, the Raj inspired millions of young, ordinary Indians to aspire to be literate and professionally qualified. That three generations of Indians had to serve as clerks to British superiors, not necessarily more accomplished than themselves, is a regrettable but possibly an inevitable consequence of gradual transition.

The Indian Constitution – equity, liberty and inclusion

The Indian Constitution is a direct outcome of the groundwork done over the previous four decades, since the Minto-Morley Reforms of 1909, to implement consultative democracy by including the professional middle class in the process. Ask any Dalit, backward caste, tribe or other minority and they will ascribe their liberation from traditional shackles to the modernist, reformist social and economic thinking which emerged, possibly as a nationalist response, to British rule.

ambedkar2

Babasaheb Ambedkar: Iconic messiah of dalit inclusion

It is not for nothing that Babasaheb Ambedkar wore a suit and a tie rather than a dhoti. For him the suit was a symbol of liberation from the oppressive rule of India’s traditional, upper caste elite and the Constitution was his guide to a more equitable future. Mayawati, Manmohan Singh and Prime Minister Modi are the organic outcomes of the much-needed, albeit self-serving, prising open, by the British, of India’s dormant, traditional cleavages—a black box of competing religions, castes and regions. Consolidation of these traditional identities at the national level via democratic institutions is what has changed the social landscape of India.

Sans the Raj – either a balkanised Hindustan or Red India

Tharoor speculates that if only the East India Company had not been as successful as it was, India would have found its own way to modernity. But what if we had remained hopelessly Balkanised instead? Why would we have not succumbed instead to the romance of Communism and gone the Chinese way? Would bloody revolution, social upheaval, the end of private enterprise, de-legalisation of religion and cultural diversity, unrelieved even by the constitutional promise of human rights and freedoms, have been better?

Contempt for the “box wallah” and the bania -Colonial hangover or the convenience of ersatz socialism? 

Tharoor speciously links our inward looking, anti-business attitude in the first four decades of independence till 1991, to our bad experience with the East India Company. This looks awfully like a red herring. It would be more instructive instead to examine the role played by our ineffective brand of ersatz intrusive socialism, used by the elite as a cloak, to retain domestic privilege. The ordinary Indian has looked westward for higher education and advancement, primarily because the professional choices at home have been too narrow and the glass ceilings too low.

Even the author accepts that the British Raj was more efficient than the domestic institutions it replaced. He is right that the rapacity of the Raj was exaggerated, precisely because its extractive capacity was greater than the loosely regulated Princely States. Consider the establishment of land records and the uniform and regular assessment and collection of revenue.

High taxes, yes but also efficient systems and records

Tharoor bemoans the high rates of taxes and the resultant penury for landowners since the burden of taxation fell on land and not trade. Yes, indeed. But that very system also bequeathed an embedded practice of recording individual property rights and updating transactions thereof, which is fundamental for development of private enterprise and for access to bank finance. The British left us with a treasure chest of land tenure, revenue and demographic data and an entire community of rule-bound “babus”. Better this than the institutional anarchy many other developing countries faced, post-independence.

Tharoor packs in masses of information and opinions around the British Empire in India. But it is all done in a grand, Quixotic style of tilting at windmills. The book is a hard-hitting, one-sided debate and caution is advised in succumbing to its mesmerising message, that the Gora (white man) is to blame.

Adapted from the authors book riview in Swarajyamas December 2016 http://swarajyamag.com/magazine/tilting-at-windmills

hindu-college

Only credible leaders can skill the youth

Barefoot college

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

This justifies some public funding also for skilling.

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

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

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

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

The writer is adviser, Observer Research Foundation

Well run, PM Modi

modi run

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

Reposted from the Asian Age May 25. 2015 < http://www.asianage.com/columnists/well-run-modi-690>

Should it worry us that Modi sarkar resembles the Ethiopian Haile Gebrselassie, the greatest long-distance runner ever and not Usain Bolt, the 100-metre thunderbolt from Jamaica?

Not really. The 100-metre dash, whilst spectacular and crowd pulling, is a good tactic for disaster mitigation but disastrous for managing a huge, diversified economy. The marathon analogy suits India better. It is a test of endurance, grit and determination. Outcomes are only visible towards the end of the 42 km race. Those in the lead for the first eight km rarely end up winning.

Other than physical fitness the marathon runner needs a disciplined mind, which restrains the urge to sprint till the last mile whilst maintaining a planned and steady pace all through. Also important is the ability to transcend the near continuous pain and stress, and remain focused on the goal.

Modi sarkar has expectedly followed the epic Bollywood masala — a marathon interspersed with sprints. Citizens have been kept entertained by a blitzkrieg of short-term Bolt spirits to simulate inclusive ascent on a rising elevator of well being, whilst working steadily behind the scenes towards medium-term goals.

The opening of 80 million small bank accounts; the launch of three social protection (pension and insurance) schemes; the attractively packaged, near weekly engagements with foreign governments on their soil and ours; pushing through the border realignment with Bangladesh; the quietening down of tension with China in Arunachal Pradesh; the relatively incident-free border with Pakistan; the warming relationship with Sri Lanka; the race to make India “cough-free” by substituting clean renewables with dirty fossil fuels; the quick response to natural disaster in Nepal and Bihar; the disciplining of the bureaucracy and the Bharatiya Janata Party’s political cadres; effective management of the sensitive relationship between the BJP and its regressive cultural font — the Rashtriya Swayamsevak Sangh; the visible dominance of the Prime Minister’s Office, which had wilted under the previous government; the productive alignments with Didi’s (Mamata Banerjee) government in West Bengal; Mufti Muhammad Sayeed’s People’s Democratic Party in Kashmir; the Telugu Desam Party in Andhra Pradesh; Amma (J. Jayalalithaa) in Tamil Nadu, are all signals of aggressive political outreach.

But behind the scenes, several half-marathons have also been initiated — the blistering pace of tendering and award of infrastructure projects with results expected over the next three years; the quick decisions on defence procurements; the swift auction of coal mines to resolve the fuel supply bottlenecks; the opening up of the defence sector to private investment and management; relaxation of foreign direct investment constraints in insurance — both major sources of good jobs and the quiet continuation of the previous government’s Aadhaar electronic platform as a primary mechanism for verifying identity so necessary for subsidy reform via direct cash transfers.

Prime Minister Narendra Modi has run the first leg of the marathon with exceptional skill. But this was the easy part. The next 16 km till 2017 is what will make or break his chances for re-election in 2019. Five key measures stand out.

First, with two big state-level elections coming up, the BJP will need to marry the compulsion for populism with fiscal rectitude, which has been the leitmotif of the first year of Arun Jaitley as the finance minister of India. Reigning in inflation is a continuous struggle in such circumstances. It is fitting that the Reserve Bank of India continues to focus on managing money supply and interest rates. The ministry of finance will have its hands full substituting for the erstwhile Planning Commission in allocation of funds and enhancing real-time, expenditure management systems and metrics to ensure “value for money” spent. Key indicators to watch will be achievement of the targeted reductions in revenue, current account and fiscal deficits.

Second, introduce a poverty and private jobs creation filter. Share the assessments publicly via a “dashboard” of proposed allocations to make the allocation process more transparent and participative. Direct democracy is of Mr Modi’s signature tune. This is also a great way of self-restraining crony capitalism and populism.

Third, cut loose the railways and the public sector companies and banks from the crippling constraints of ministerial intervention. Corporatise all production and service delivery entities as a first step to reform, followed by administrative autonomy and selective listing of stock. The creeping tendency, reminiscent of the “Indira Gandhi ‘commanding heights’ syndrome”, of falling back on the public sector for getting quick results is unfortunate. The international experience shows that poor investments are the outcome if public funds are plentiful. India cannot afford “bridges to nowhere”, even if they create jobs in the short term. This implies fixing the “broken” public-private partnership (PPP) model, not effectively junking it altogether with the government assuming all the risk, as is being considered currently.

Fourth, trim the flabby Union government. The UK model of agencification and administrative reform, tight budget constraints, monetisation of assets and the levy of user charges, fits the Indian context best. Look for “asymmetric reform”, rather than whole-of-government approaches. The Aadhaar unique ID experiment is a useful example of the benefits of strategic, but narrow reform. The “Namami Gange” Clean Ganga Mission is another example. If “cooperative federalism” is to be more than just an attractive slogan the Union government must be the pied-piper, which the state governments follow.

Fifth, fix the big institutional constraints to rapid development. The last thing we need is a clash of titans — Rajya Sabha versus the government — a replay of the dysfunctionality of the American political architecture; judiciary versus the executive. Are we really keen to tread the Pakistan route? Avoid proxy veto by the Union governors over elected state governments — a throwback to the ugly days of the Emergency in the 1970s. Implement the 74th Amendment (1992), which mandates decentralisation but remains ignored two decades later.

The final 16-km dash in 2018 and 2019 will be easy if the half marathons already initiated are run well, over the next two years. The trick is not to sacrifice public interest in an all-out attempt to win state elections in Bihar and Uttar Pradesh. The question remains: will the BJP’s marathon mind rule or its sprinter’s muscles dominate?

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.)

“Class” in diplomacy

coffee

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

“Diplomacy is not instant coffee” said the official spokesperson of the Ministry of External Affairs yesterday. He is right of course. If you are the “instant coffee” type,  you are unlikely to be invited to join the international high table.

This doesn’t mean though that, if our MEA mandarins switch from Coffee Board brew to private caches of Hacienda La Esmerelda (US$104 per lb.), the Chinese troops camping so brazenly at Chumar would vanish instantly. The diplomatic high table respects what you do at home not what you pretend to do when you are abroad or what you pretend to be, whilst mixing with the rich and mighty. “Class” is a social stamp affixed to your entire family, not just you, which sticks tighter than glue.

As in diplomacy, class at the individual level, is also increasingly about where you are going rather than where you have come from. The American dream best illustrates this change since the early part of the last century. “You can be what you want” so long as you have fire in the belly.

Ironically, the Soviets had the same ideology, but not the instruments. They ended up with a classless but skewed society where Party based patrimony and cronyism became more important than merit, tested by competition.

The Chinese corrected for this gap between ideology and practice and have prospered since 1979. The results are visible. One third of the people pulled out of poverty in the last decade by job creating growth, are Chinese. A classless “poor” society is becoming a classless “rich” society. To be sure this has resulted in growing inequality, but inequality is to growth, as wine is to cheese.

India has not been far behind in effecting a quiet social revolution with its unique brand of positive affirmation for the marginalized and merit based competitive entry for the excluded, into the heady domain of the powerful via public service jobs.  PM Modi is the best example that this policy has been reasonably satisfactory in giving entry points to make individuals upwardly mobile.

But as a nation, so long as 70% of our population is poorer than the admittedly blunt, international standard of US$2 per head per day (or more colorfully, poorer that the proverbial “Church Mouse”); so long as our external account is fragile and so long as our political parties don’t align, like magnetic strips, in a single direction with respect to foreign policy, we are doomed to remain mere “guests” at the high table. We may be thus honoured for our future potential, but we will continue to be subtly excluded from substantive current decisions, till we become paying members of the club of “classy” nations.

We are years from getting there. We are still grappling with the fundamentals of infrastructure development and growth. How to make PPPs work? How to integrate world class assets into a creaky frame? How to scale up manufacturing and join the international value chain? These are our current 101 concerns. We have targets for infrastructure: (1) A fast train to Arunachal Pradesh by November 2014- a riposte to President Xi’s rather heavy-handed assertion of brute power by making the Peoples Liberation Army troops pitch camp in a border area, which both China and Indian patrol, even whilst he himself was savouring the delights of an Indian welcome last week.  (2) Fuel supply issues to be sorted out to enhance capacity utilization in electricity generation. (3) Faster project clearances (4) Easier environmental clearances and so on.

But we have no targets as yet for poverty reduction. We spend more “intellectual” effort in arguing about the nominal base line for poverty than on getting people to cross the line and remain above it.

An alternative strategy, one advocated by Mahatma Gandhi, could have been to put poverty reduction foremost. Bullet trains, highways, better airports, more electricity may all be inputs in the log frame defining the sequential path to achieve this key strategic objective. But why is the log frame and the thinking not shared with the public? Do we have a “poverty filter” in place which can help government rigorously evaluate and rank alternative investments for their poverty reduction potential? If we do not, then how can we be sure that our scarce capital resources are being allocated and spent well aligned to the principle of “value for money”?

Diplomacy is really about getting better deals with international partners that would be available automatically given the international market. Our external business strategy should be similar to that followed by the Dalai Lama and earlier by the Mahatma. This would be the 3H strategy characterized by Humility, Humanity and Holding Harmless.

Humility is the ultimate signal of strength. The Mahatma, clad in his spare loin cloth, demonstrated this whilst winning over the world with his message and his thoughts.

Humanity is of the essence to Indian philosophy. Given the extent of poverty and the depth of inequality, the relatively low level of social disorder is striking. The origins of this social-cohesion lie in an essential Rousseauian mind space, which views human nature as essentially benign; which accepts the dirty underbelly of humanity-greed, ego and excess, as human frailties; which accepts that the world is an unfair place; that differences in resource endowments and the standard of living are natural but draws comfort from the belief that there are countervailing social forces, which bring about social justice in the long term. This philosophy was recently well applied to our external relations by Minister Sushma Swaraj in a suave but home-spun manner “There are no full stops in Diplomacy”

Holding Harmless is the classic strategy of a democratic, heterogeneous, soft state and segmented economy like ours. Progress and reform yes, but not at the cost of unbearable pain even for significant minorities and always aligned to the principle of “None Left Behind”.  In external affairs just as we seek differentiated responsibilities to allow us to “catch up” with the rest of the World so must we recognize the special needs of others who are worse off-particularly select countries in South Asia.

How does 4H translate into practice?

First, we must learn to observe, listen, absorb and adapt from the experience of others rather than spend our time, preening and preaching about our practices and policies overseas. Our ways of doing things are contextually good, primarily for ourselves. They do not become better just by marketing them aggressively overseas. Nor do we need overseas endorsement of our ideas and policies.

Second, our officers overseas must resemble tradespeople; annoyingly nosy; curious; people-persons; seeking out deals in national interest, rather than haughty, remote representatives of the Indian State. False pride can be our fall.

Third, PM Modi is right in declaring “make in India” as his leitmotif. Indian big business should heed this call. There is nothing edifying about earning money in India but investing it overseas. It is neither a coup for big Indian Business nor for the government. Rather, it is a cop-out for the country. It illustrates that Indian business has more faith in foreign business environments and opportunities that in those available in India. Such transactions may also be suspect due to the opportunities they provide for “havala” (extra-legal export of either illegal earnings in India, or to evade income tax through dodgy invoicing of imports and exports). The national duty of Indian business is to leverage overseas funds for investment in India.

Fourth, before we wade into securing the World against terror; or showcasing India’s “naval might” it would be prudent to spend a decade on building up our military assets; modernizing our equipment; re-stocking our armories and re-skilling our personnel. Indian peace keeping forces abroad do us proud but that is because of their personal valour and fortitude. They do so despite shoddy personal equipment and arms. We have too many security related issues to resolve at home, to have the mind space or the financial muscle to police the world.

“Class” as a social identity is increasingly an outdated concept everywhere except within the government where such Colonial traditions survive. We must work to restructure government to eliminate class based identities. Baby steps in that direction could be abolishing separate toilets for senior government officers in government buildings. Staff lunch gatherings in offices, at least twice a week is another way to socially integrate senior officers with their junior colleagues. Switching over to digital offices systems and denuding officers of personal secretaries and messengers, is another. We must work hard to replace the steaming Coffee Board brew, currently served by a waiter in colonial livery, with a plebian coffee dispenser at the end of each corridor, although stocked with- what else but Esmerelda?

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