governance, political economy, institutional development and economic regulation

Posts tagged ‘Terror’

Modi@Davos – Jawboning the future


Even as Prime Minister Narendra Modi will be winging it to frosty Davos for the World Economic Forum’s annual meeting next weekend, his bete-noire — Congress president Rahul Gandhi — has decided to be different and spend the coming week in his parliamentary constituency of Amethi, in rural Uttar Pradesh. Both seek inspiration and support. But from very different sources.

A shared future less likey than a dystopian nightmare


As usual, bombast is expected to rule at Davos. Consider the title of this year’s meet — “Creating a Shared Future in a Fractured World”. It completely obfuscates the fact that everything the world has done over the past 40 years has conspired to keep the majority share of the fruits of development within the elites. The rising inequality and congealing wealth at the very top is witness to the failure of the open economy model to deliver growth benefits across the population. China’s President Xi Jinping contested this proposition in his address at Davos last year. Yes, China has lifted 700 million people out of poverty — more than any other nation. But relative poverty has increased even in China.

As if this was not enough, automation and artificial intelligence shall, over the next two decades, push ever greater masses of unfortunates outside the virtuous cycle of income enrichment. This is a prime concern for India, with 60 per cent of our current population less than 31 years of age.

It doesn’t end there. Once we create this dystopian world in which the few, engaged humans work within an insulated eco-system of high tech, the large mass of humanity will be on the outside looking in. They would be fed by subsidies thrown at them. Consider that block chain if applied widely to everyday transactions can scupper the employment of auditors, accountants, lawyers and judges — all of whom earn a living out of the problem of authenticating facts. Possibly, the efficiency benefits of automation may be high enough to finance generous handouts to the losers. But it would be a sorry society surviving on aid, rather than individual effort. We know already how debilitating aid dependency is.

This model of growth is not sustainable and needs to be junked. But it is unclear what should replace it. Davos is unlikely to help in that direction. There is never time at Davos to get beyond the breaking news.

The silver lining – WEF exaggerates the fear of a fracturing world

Consider also the assertion that the world is a more fractured place today that it was a few years ago. Nothing could be further from the truth. Just last year at Davos, China, a habitual outlier, took the lead to reinforce the need for world integration. Compare this with the China of just 40 years ago — which was not even a member of the World Bank, and which joined the World Trade Organisation only in 2001. The rapid increase in the share of domestic GDP exported today is another indication that the world has shrunk, not fractured.

Show me the money

Davos is more about striking deals than philosophising about the world order. Prime Minster Modi is a consummate deal-maker. So, expect some significant commercial action at Davos. After all, Davos is not the United Nations, where nations talk at each other. It is a forum for leveraging business opportunities through public-private partnerships.

India a leader in frugal innovation


India has already thrown its hat into the ring of frugal innovation in space technology, with our Mars mission. Davos would be a good opportunity to emphasise the peaceful development of missile technology by India — in stark and sharp contrast to China, Pakistan and North Korea.

Unparalleled deep fiscal and institutional reform

No country has taken steps, on the scale we have, to root out corruption using digital technology, banked transactions and the Goods and Services Tax. These have together negatively impacted economic growth in the short term. To be sure, there have been glitches along the way. But steadfast remedial action is delivering financial inclusion for all. This is more than just an economic revolution since it goes to the heart of culture and social practices.

Conquering terror

Mr Modi was one of the first to warn the developed world that terrorism was a hydra which strikes rich and poor alike. India has for long suffered cross-border terrorism, which seeks to incite an alternative religious reality to Indian Muslims, who are a significant minority. India’s foundations are secular.

India is quintessentially liberal and entrepreneurial.

India was a secular country even before the term “secular” was inserted, somewhat unnecessarily, into the preamble of our Constitution in 1977, during the Emergency, by then Prime Minister Indira Gandhi. Also, despite the term “socialist” having been inserted into the Constitution at the same time, India has never been a Socialist country.  Land ownership has always been personal in India. The concept of property rights is deeply embedded into our culture. The state-owned industrial monoliths — the visible outcomes of “socialism” and the entire employment in the government sector, has never exceeded around five per cent of total employment. If there is one thing India is known by it is the spirit of entrepreneurship. The government is trying to liberate “animal spirits” through light touch regulation, the rule of law and supportive infrastructure.

Can POTUS & Modi queer President Xi’s, 2017 play as “leader of the world”


US President Donald Trump seems to have upset Prime Minister Modi’s moment at WEF. The ebullient and volatile POTUS is likely to garner all the sunshine. But Mr Modi is sure to use their joint appearance at Davos. He will fashion events and his remarks in a manner which point to a genuine partnership between the United States, Europe, Japan, Southeast Asia and India. Together, these economic actors contribute nearly two-thirds of the current world GDP. More important, they share some institutional and cultural attributes, which even by the jaded standards of today, can be called morally superior — like due regard for citizens’ rights and a commitment to enhancing the transparency with which the State functions.

Some homework may show that India walks the talk on shared growth


Davos will be a tough challenge for Prime Minister Modi. He needs a credible story to explain why growth — the holy grail of the Davos crowd — has lagged in India even as growth has picked up world-wide. It would be great if he could substantiate that while headline growth has lagged, shared growth has increased, particularly if the 116 backward districts (out of 593 total districts in the country), identified by NITI Aayog have, contributed more than their share in GDP to growth.

That, after all, is the growth model the World Economic Forum is looking for.

Adapted from the author’s opinion piece in The Asian Age January 13, 2018

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.


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”.


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.


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.


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.


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


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.


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.

1542 words

Paris Takeaway: One Culture Is Not a Quick Fix

Indian bus

(Photo Credit: www,m,

For the French, “culture” is everything. It encompasses the language one speaks –French of course-; the food one eats-mildewed “blue” cheese; the wines one imbibes and the best of fashion. One Just has to compare the tres chic Christine Lagard-Managing Director of the International Monetary Fund with the practical, stodgy Mrs. Angela Merkel, Chancellor of Germany, to  visualize why France was so very different from the rest of Europe.

The idea of “one culture, one people” was peddled by France across its colonies, particularly in West and North Africa to create vast populations who, “in their heads”, were French, not African or Arab. Macaulay’s Minute (1835) did the same in India, except that British “Shepherd’s Pie and warm Beer doesn’t have quite the appeal as French cuisine.  No surprise then that in a cruel twist of fate Asian “curry” is the favorite British dish today. This would not have been possible in France.

French culture is emotively attractive. English has to be bit into-like a tough roast- to speak it but one has to swim languorously into French to speak it well. Listen to the French song “je t’aime”; a duet written by Serge Gainsbourg and immortalized by the Goddess of sensuousness- Brigitte Bardot in 1967. Compare this with the somber notes of Don McLean’s “And I love you so” and you will feel the difference between the cold Anglo Saxons and the emotive French.

The French, including the French co-optees- are a warm and loving people with their heads full of wooly, socialist ideals of Liberty, Equality and Fraternity. Of course all these ideals are bounded by a narrow regard for “French culture”. Take the case of dress codes. Muslims, who increasingly regard the “hijab” as an Islamic symbol, were not permitted to wear one in public. It is just as difficult to break through the French tradition of a large and inefficient public sector and taciturn trade unions- though we in India could give them a run for their money in this aspect.

Many nations, including the US and India, borrowed the ideals of the French Revolution 1789 but all applied them in a practical manner. Slogans like “we are all one World” sound great in a hippy hangout but are impossible to implement. End goals like Equality are just that. They define a glorious possibility but can never reflect the cruel, everyday reality of power hungry elites, patrimony and dissimilar endowments, as it exists everywhere in world.

The killings in Paris are being explained away as caused by religious, ethnic or economic cleavages. All of the above or any one of these could have been the immediate reason for the killings. But what they have laid bare is that the basic underlying assumption in France that one culture can laminate over all other cleavages is a lie.

A common culture is not enough of a glue to paper over the growing gaps between immigrants and insiders; white and the others; the Muslims (10% of the population) and the majority Christian faith; the educated and aspirational and the hopelessly poor and forgotten. Even Communist China has spectacularly failed in elevating the God of Communist Nationalism as a substitute for religion or ethnicity. This is despite the assistance of State machinery which is at its best in very heavy handed policing.  But a Common Culture is surely anathema alongside a belief in Liberty, Equality and Fraternity.

Our deepest sympathies are of course with the French for what has come to pass to their beautiful country. But no Indian can resist the deep sense of relief that despite our poverty; our widespread illiteracy; our linguistic, ethnic, cultural and religious heterogeneity we as Indians have hung together fairly well in relative terms.

This is not to say that minority rights are well protected in India. Nor do we hold that India has done well by its marginalized populations. But for a relatively new State and a less developed economy with deep rooted traditional cleavages, it is a remarkable achievement that we are bound ever tighter by our non-traditional beliefs in democracy; equity in access to public opportunities and freedom of choice in all aspects of life.

India has weathered violence more extreme, that seen in France recently, despite it being directly as viciously and specifically at a particular sect; religion or ethnicity. The reasons why we have managed to do so are ironical.

First, a weak State can be an asset. Unlike France we were never able to become a “Nanny State”. Every Indian knows that if she or her extended family does not look after themselves no one else will step in-least of all the State. This lack of an efficient, impersonalized, State provided social protection is cruel for the poor. But the consequential, pervasive, economic pressure of constantly working to make two ends meet keeps us on our toes. The desperation to keep working reduces the availability of idle human fodder to perpetrate the kind of terror in Paris.  The downside is the magnified roles local elites play in shaping opinion due to their economic and political clout.

Second, Indians happily accept that all 1240 million of us we are NOT one big happy family with a common culture. No Indian wants a common, Pan-Indian culture. Indians are used to living and working in an aggressively antagonistic, “non-localized environment”. The French in contrast are more molly coddled and less “internationalized” than us. 25% of Indians do not live in the place they were born and large scale migration is a fact. 2% of Indians live in foreign countries. We have assimilated and adapted to invaders, foreign conquerors and traders over the last 1000 years.

So let’s take heed of what has happened in France and the failure of the “one culture” project of the French. The world is too open; too complex and too integrated today for seeking “autarkic” options.

Culling our traditions to get options for the future is sensible but must have the caution that our greatest tradition has been of keeping our windows open, not tightly shut and making space for anyone wanting to clamber onto the “bus”, which is India.

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