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Posts tagged ‘Sushma swaraj’

Afro-India: claiming the 21st century

Shared Dreams, Shared Destiny” screams the banner welcoming African delegates to the Third Indo-Africa Forum Summit. Forty heads of state are in attendance, along with dozens of ministers and 2,000 officials. Day one, Monday, got off to a shaky start. The press meet was termed a “damp squib” by one leading financial daily. Most delegations were absent disappointing the media which had to make do with our impeccably spoken minister Nirmala Sitharaman and her team of high officials.

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Pre summit conference on trade with Minister Sitharaman

A 7.5 scale earthquake, shook Delhi in the afternoon but caused no damage. Hopefully the visiting “big men” and the solitary “big woman” — President Ellen Johnson Sirleaf of Liberia — will remember the demonstrated resilience of Indian construction, whilst deciding whether or not to go for a cut-price bid from China for their next project.

Day two had great press for Union minister for external affairs Sushma Swaraj, in a bright orange sari, with swathes of delegates draped around her.

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Minister Swaraj has these big men eating out of her hands

Why South Sudan, which has more cows than people, sought help from India to improve its meat supply business, remains a mystery. It illustrates how limited is Africa’s association with India.

Fuzzy agenda

Unfortunately, the government remains woolly on what we want to do with Africa beyond importing their raw materials and exporting cheap machinery, cars, chemicals and pharmaceuticals to them. Indian business is way ahead of this strategy. It sees Africa as a popular investment destination given the ease of doing business there at higher margins. Siuth African President Jacob Zuma has already sounded the battle cry of “Make in South Africa”.

Doing Business Report pats Indian on the back

Fifteen countries, or one-third of the 49 African countries, with a 30 per cent share in Africa’s GDP, monitored by the World Bank’s Doing Business Report, rank higher than India. Mauritius leads the pack at rank 32 — ahead of Japan and Italy, followed by economic powerhouse South Africa and tiny Rwanda, which weathered its 1990s ethnic crisis spectacularly.

India ranks a low 130 despite frantic efforts to improve its rank from 142 last year. Of the African economies which rank lower, 50 per cent or 15 countries are classified as “fragile”. African governments are well ahead of us in the art of outreach to attract investment or doing international business.

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Amitabh Kant the “go to” man for branding India

India’s democracy- only for marathon runners

Our next big “selling point”, from the Western perspective, is the democratic architecture of our country and its resilience since Independence in 1947. To be sure, there is much to be proud of. But it is doubtful if any of Africa’s “big men” and the solitary “big woman” will be attracted to our fractious democracy. Africans prefer order and discipline like a lot of Indians. They willingly barter personal liberties and freedom for the sake of their communities. Tribal bonds are alive and vigorous in Africa, much as caste is the leitmotif of India. The unhappy outcome of the Arab Spring, which unduly empowered citizen groups against the state, endorsed their strategy to retain an intrusive state to maintain order.

India is too big, too diverse, too individualistic and too “argumentative” for heavy-handed State regulation. Possibly, Africa could need a federative, “soft State” strategy, should they one day decide to form the United States of Africa. But for the present, we have few lessons for Africa on how to run a government. Why then, have so many top decision makers bothered to come? Here are my thoughts:

Is the new India for real?

First, Prime Minister Narendra Modi’s muscular outreach to the world has evoked intense curiosity. Foreigners are lining up to check if we are ready to walk the talk. Does reality match the hype? It helps that India has a global reputation for gorgeous shopping — the jewelry, the silks, the pashmina, the prêt-à-porter fashion wear, all available at competitive prices, not to mention the grandeur of Mughal and colonial India reflected in the many monuments in Delhi which are stunning to gawk at.

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Jugaad and the very visible hand of God

Second, is curiosity, about an ancient land that is reputed to be managed directly by God, because doing so is beyond earthly skills. India is full of bad news, rapes, riots, hunger, poverty, illiteracy and poor services. And yet, it is the fastest growing economy in the world with a reasonable ambition of joining the “big three” or “the big five” over the next 10 years. Bung in the fact that government is hopeless at providing primary education, but arranges the kumbh mela (religious festival) annually at the Sangam in Allahabad for 100 million pilgrims over the space of a week, without a major disruption or incident and the role of divine intervention in keeping India going becomes clear.

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We produce the full range of products from leather jootis to spacecraft which hover around Mars, with consumer durables, textiles, chemicals, pharmaceuticals, intermediate goods and industrial machinery also thrown in — not to forget the services provided globally by our IT companies. Yet 60 per cent of our people live below the $2 per day poverty line; just 3.2 per cent of Indians (middle class and above) own 64 per cent of the country’s wealth (Credit Suisse 2015). How we manage these contradictions, the “social noise” and the “political disruptions” is a miracle that many feel they need to “touch” to understand. And so they come.

Come, make friends in India

Lastly, and most importantly, heads of state come to India to build lasting relationships with a country which is non-threatening, well-meaning, gentle — at least by the standards of international realpolitik — and is slated to have a share of 10 per cent of the incremental world GDP by 2025 and 15 per cent by 2035.

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Prime Minister Modi meets President Uhuru Kenyatta of Kenya

Selling products and arranging capital is what our private sector should be doing, not the government. After all, business is best placed to strike deals on both sides of the table. What our government needs to do is to paint in the details of the “Idea of India”, projected by Prime Minister Modi, as a focused, motivated country determined to claim, along with other developing countries, the second half of the 21st century as “our” own.

The Africans cannot be bowled over by pomp or ceremony. For them a Mercedes is merely a high-end taxi, not an executive limousine. What attracts them, instead, is the simplicity of life in India, the concern for high human values, even amongst our poor, combined with our earthy tradition of seeking “value for money” — well-known to them via our Gujarati expatriates. But if this fails to click, dancing to Congolese Rumba or the fusion Afrobeat also helps. Pity there is no joint Nolly-Bollywood event planned.

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Rashtrapati Bhawan, New Delhi illuminated for the Diwali festival

Adapted from an article by the author in Asian Age October 29, 2015 http://www.asianage.com/columnists/afro-india-claiming-21st-century-722

African “big men” in India

African heads of State will don Modi kurtas and party in New Delhi, October 27 to 29. The occasion is the third meeting of the Indo African Summit. It would be quite a sight to see Robert Mugabe, age 91, President of Zimbabwe for the last two decades, take a turn or two on the dance floor. But we may have to make do with the more agile President Jacob Zuma.

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President Jacob Zuma of South Africa at his agile best

Hopefully, the parallel with ASEAN will not extend to Minister Sushma Swaraj having to sing at the concluding party, just to liven up the proceedings, along the lines of Madeline Albright, US Secretary of State in 1997, who crooned her version of “Don’t cry for me Argentina”.

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Minister Sushma Swaraj with members of parliment

Beyond the theatrics, it is tough to figure out what we want to achieve with the possibly forty heads of state or governments and many more senior politicians and officials from Africa who are expected to participate. Similar summits were held in 2008 and again in 2011.

Claim the 21st century for Africa and India

Demographics suggests that the second half of this century belongs to Africa and India. But to claim this “historical destiny” India and Africa have to do the right things. One such is to put the right institutions in place.

This “mirror” long term need is what binds India to African countries far more than the standard diplomatic fare; trade and investment, terrorism and security. These are merely the transactional outcomes of sound institutional development and better dealt with at specialized fora which already exist like the World Trade Organization, the United Nations and the Bretton Woods institutions and their offshoots.

Context is key for developing “best fit” institutions. Context varies enormously between India and Africa and even more so within Africa. But one common theme across most African countries is a rich endowment of natural resources (except Rwanda and Burundi) which distinguishes them from resource poor India.

In contrast, adherence to broad democratic norms is increasingly the preferred option across Africa. Swaziland and Lesotho remain the only kingdoms in sub-Saharan Africa. Yesterdays “dictators” are today’s leaders, who test their popularity in elections.

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Presidents Yoweri Museveni of Uganda and Paul Kagame of Rwanda

India has been the world’s largest democracy since 1947. In Africa Senegal has similarly been a multi-party democracy since 1960 when it became independent. Senegal had its “Indira Gandhi moment” in the first decade of this century when then President Wade tried to unduly empower the executive through constitutional amendments. The democratic backlash was strong and he lost in elections to his own Prime Minister in 2012- President Small still leads today. Mauritius, Kenya, Tanzania, Zambia, and later South Africa, Botswana and Namibia also have stellar democratic records.

African public service structures have evolved unlike ours which have atrophied

The institutional architecture within which government functions is critical for achieving developmental goals. Within the broad institutional architecture the manner in which the civil service is structured is key. India has much to learn from select countries. South Africa, Ghana, Senegal, Mauritius, Kenya, Tanzania and Ethiopia for instance, have developed and maintained outstanding public service structures and traditions.

These bureaucracies have weathered far more tumultuous times than we in India have ever encountered in the post- World War II period. But they remained committed, motivated and deliver results- three characteristics that are iffy to apply across the board in India.

India presents a fascinating case study of asymmetric development. On the one hand we have scientists sending space expeditions to Mars. At the other end poor villagers still rely on traditional healers and “bangali” doctors- sometimes out of choice and habit but mostly out of compulsion since the public health service is so poor.

It is fashionable today to advocate the case for asymmetric development- getting reform in through the door wherever possible without attempting an across the board improvement in the civil service. India is a good example of how this does not work. Islands of excellence remain just that cordoned and insulated from the ills that afflict service areas not considered critical from the short term (sighted) point of view.

India manufactures or assembles more brands of cars, scooters and motorcycles in India than it is possible to remember. We pride ourselves on our in-house capacity for developing infrastructure. We have embarked on a “make in India” mission. Foreign students come to India to study management, medicine and engineering.

Yet, within the government, it is rare to find an official with the relevant technical qualifications, in a senior position with decision making powers. This is not to say that our top bureaucrats are not highly educated. Invariably they do have these credentials, in a general way. Many may even be a PhD. It doesn’t get better. But rarely is it that the academic qualifications and the experience overlap. This disregard for “technical excellence” as a driver of good public administration is at the root of our inability to apply the vast knowledge reserves we have built up to improving public services on the ground.

We should learn for countries in Africa which have done away with the hierarchical, cadre based, colonial administration systems they inherited and have moved on to a position based meritocracy. South Africa, Mauritius, Ghana, Senegal, Kenya and Tanzania are examples.

Our federal structure is an outstanding example of contextual decentralization

Whilst our Constitution is a Union of States rather than being a federation like the US Constitution, it is a dynamic yet robust instrument. It has been amended one hundred times since 1952 but it remains the driving force for growing the “Idea of India” as a single nation comprising unparalleled diversity in religion, ethnicity and culture.

Much of richness of the Indian public management experience derives from the significant levels of devolution to the thirty state governments. Around 40% of the Union government’s revenues are made available to state governments as their share of tax. An additional 15% of funds are transferred to state governments for executing national development schemes. State governments also have their own sources of revenue.

The size and character of states varies enormously in India. These range from the mammoth Uttar Pradesh (UP) with a population of 200 million (the next biggest state is Bihar with pop. 100 million) to tiny Sikkim population 600,000.

Uttar Pradesh is larger than the largest African nation-Nigeria-pop. 189 million, renowned for its oil rich economy, entrepreneurial people and pluralistic society.

Sikkim, sticking out like a “thumbs up” between Nepal and China in North Eastern India with streets neat as a pin and people, as disciplined as the Rwandans closely resembles the well governed, gorgeous, North Western African island nation of Cape Verde.

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Cape Verde

Africa manages regional co-operation exceedingly well

India should look closely at the cross country arrangements within Africa which facilitate development based on the comparative advantage of countries. Power pooling across the Southern Cone countries and West Africa is one such example. Access to sea routes for land locked countries like Zambia, Zimbabwe and Uganda via rail, road and pipelines provides good models for cost sharing across Indian states. Truth and reconciliation type negotiations are another African specialty.

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Presidents Bashir of Sudan and Salva Kiir of South Sudan- friendly foes.

The Indian institutional arrangements for regional integration have fallen into disuse and are ineffective. Water sharing arrangements are particularly dissatisfactory and legal disputes linger for years, increasing conflict and retarding development. Similarly implementing the Goods and Services tax- a single, value added tax, to replace state level taxes on the production and sale of products, to which all parties are agreed in principle, has become harder and more painful than extracting a tooth.

It may have been really useful to arrange sessions where state chief ministers could have interacted with heads of state depending on areas of mutual interest with their officials following up on the detailed areas of cooperation.

We are not China

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aarti” evening prayers on the banks of the Holy Ganga

Finally how can we  differentiate ourselves from China whilst dealing with Africa? Clearly the worst option would be to emulate the muscular Chinese style of economic diplomacy. For one we just don’t have the firepower. For another the principle of comparative advantage advocates that everyone must play to their strengths.

China’s comparative advantage is cash-lots of it. But the Chinese model of development is not something which is easily replicated because of the size of its economy, the homogeneity of its population and its long history of splendid isolation. Also it is unlikely that exporting workers in droves to implement projects overseas is a sustainable or effective developmental strategy for the beneficiary countries.

Our comparative strength is that we are the “Constantinople of Parliamentary Democracy”. We straddle the democratic heritage of the West and the traditional Asian democratic principles. In doing so we have evolved a home spun democratic model. Like all jugaad (learning by doing) the ends of this model are a bit jagged.

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The Indian parliament on high alert post a terrorist attack in 2001

Nevertheless, it is a model which works- both for economic growth and to uphold the human liberties of speech, association and property. Within this generic model of development lie gems of granular achievement at the state government and local level, which provide solutions to the universal development barriers of elite control, low initial capacity, nascent institutions and less than adequate rule of law mechanisms.

India must use the Summit to share these nuggets of experience which are at the heart of building institutional resilience for sustainable development in poor countries.

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Wooing Pakistan; India’s “less friendly” neighbor

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(photo credit: post.jagran.com)

PM Modi’s external affairs team has hit the ground running; making friends and influencing people in the region. His visit to Bhutan and Sushma Swaraj, External Affairs Ministers’ forthcoming visit to Dhaka, build on links forged previously. These are relatively “low hanging fruit” to show that we want to be part of a friendly neighborhood. PM Modi said as much in Thimpu when, borrowing from  Acemoglou D. (2012), he stressed the criticality of “good neighbors” for gross happiness

But you can’t choose your neighbor and Pakistan is the biggest. It is a mixed blessing that Pakistan is defined politically by the province of Punjab and its heart beats in Lahore. Our blighted common history is most deeply etched in the minds of Punjabis. The upside is that PM Nawaz Sharief has a natural proclivity to develop his province; Punjab. In our Punjab, the BJP has an ally in the Akali Dal. Defence Minister Jaitley has laid claim to his Punjabi heritage and is likely to grow his links with Amritsar. Most importantly, our Punjab has been in relative decline since the 1990s; an outcome of poor fiscal management (Aiyer.S.2012 CATO) by both the Congress and the Akalis. Too many freebies and too little revenue wrecked Punjab, despite its robust agriculture; medium scale industry and vibrant entrepreneurship.

The immediate problem is jobs for unemployed youth. Economic prosperity allows a decent standard of life for even the unemployed young due to family wealth. But drugs and alcohol addiction are the downsides for directionless young people; too rich to work in the manual and semi-skilled jobs available. Rapid industrial growth is the answer for “quality jobs”.

Trade and investment normalization, between Pakistan and India, can immediately benefit the two Punjabs in volumes which could be significant for the two entities. When we expand the analysis to the national level, the welfare gains reduce and point to an imbalance in favor of India. The full potential for trade  is estimated at around USD 20 billion or ten times what it is today, by ICRIR (2013), FICCI (2012), CUTS (2012) and Hafeez Pasha, a previous Finance and Commerce Minister of Pakistan, now Dean of the School of Social Sciences, Beaconhouse National University, Lahore.

This would still be only 6% of India’s total trade but nearly one half of Pakistan’s total trade. It is unlikely that Pakistan would want to be in the precarious position of being dependent on India’s market to that extent. The realistic bound for trade level is consequently much lower. But this makes it of less interest nationally. Since the business opportunity comes with the considerable risks of insecurity and the adverse impact of an uneven keel in diplomatic ties, businessmen are justified in spending even less time on it.

To complicate matters, the central government in India is no longer in the drivers’ seat. Business opportunities are best defined outside the ambit of government sponsorship and regulation, not within it.  Shrinking fiscal space narrows the opportunities for “directed entrepreneurship” of the Chinese kind. Increasing levels of fiscal federalism and enhanced private investment has strengthened the role of state (provincial) governments in industrial development. Local labour and land regimes have become key to private investment.

Pratap Singh Kairon, Chief Minister of post-partition Punjab (including Haryana and Himachal Pradesh) was famous for micro managing economic development and inviting industrial investment to, what was then, a dusty, rural, unskilled hinterland, a mere adjunct to the urban marvel of Lahore, which still shines as a jewel. But successive governments in Indian Punjab have grown it into the granary of India by utilizing its comparative advantage. It is now time to pool the resources of the two Punjabs to mutual advantage.

Naysayers and conspiracy theorists will point to the downside of closer ties between the two Punjabs providing a basis for the break-away of an amalgamated Punjab from India. Either due to the allegedly “burning” desire of Pakistani elites to undo the shame of the break-away of East Pakistan, by amalgamating our Punjab into Pakistan. Alternatively, but less likely, the theory goes, this could happen due to the efforts of the Khalistani’s to become a separate nation.

Break-aways from India are a romantic’s fantasy, both in Kashmir and in Punjab. Both Kashmiri’s and Punjabis have much more to lose by breaking away from India, than there is to gain, by either carving a separate identity or amalgamating with Pakistan. “Landlocked” developing countries are more prone to fail, as separate nations, for a variety of reasons. Paul Collier (2007).  Punjab and Kashmir qualify on that count.

India’s Punjab, Haryana and Delhi have a combined GDP of around USD 190 billion; broadly similar to the GDP of Pakistan. 85% of Pakistan’s GDP is derived from Punjab and Sindh and 54% of the population is Punjabi.

Punjabiat” is consequently a significant force in forging closer links. But historian Zoya Hassan warns against falling into the trap of assuming that cultural history and identities on both sides of the border alone can drive the future. The political architecture; composition of the elites and aspirations have diverged considerably, since 1947. Notwithstanding the loss of close cultural similarities, economic cooperation provides a firm and sustainable basis for growth and positive welfare benefits on both sides of the border.

It may be wise to be practical rather than romantic or aggressive in identifying what is possible even with the bon-homie current prevailing between the two PMs. Three generic principals can help to make identification of the entry points.

First, trade and investment liberalization can never come at the expense of decreasing levels of security. Any adverse impact must be swiftly containable. This implies that normalization proposals must preclude the proliferation of generalized person-to-person contact.

Second, the proposal must be tightly monitorable. This implies its implementation in a defined and sanitized environment.

Third, it must provide real benefits-jobs and business to local populations along both sides of the border.

All three conditions are met if India proposes a jointly administered industrial hub along the Punjab border with a target of creating 1 million jobs and a turnover of USD 40 billion. This could be an EPZ linked both to Karachi and Mumbai or a combination of an SEZ and production for meeting domestic demand. Naturally 100% FDI would be available with attendant harmonized tax structures.

Since farmers on both sides complain of poor productivity, due to the insecurities of a border area, getting land should not pose difficulties. This would be made easier if displaced farmers are offered commercial incentives in real estate development. The facility could link into the proposed Amritsar to Calcutta and the Delhi to Mumbai industrial corridors on the India side.  

Like Pakistan, which faces growing fiscal pressure from dwindling external aid and has to meet the demands of its demographic dividend, the Akalis are under pressure in Punjab to shape up or ship out. The Defence Minister, Jaitley fell prey to this public disenchantment with the Akalis by failing to get elected from Amritsar. Time for Mr. Badal to act before he and Punjab miss the bus yet again.     

 

 

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