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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?

Recall; a “second-chance” for voters

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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