Gurcharan Das View RSS

Covid and the bureaucracy: India needs modern institutions that are autonomous, accountable and creditworthy 26 May 2021 10:23 PM (3 years ago)

The events of the past month have been so tragic, so unspeakably ugly that the only rational response was to pretend it wasn’t happening. The raging second wave of the virus revealed not only the governmental ineptitude but also exposed India’s soft underbelly – our heavy bureaucratic system, which wasn’t nimble enough to cope with the crisis.

Even more damning was the reminder of how this system fails us daily to deliver basic public goods – justice, health, education, water, electricity etc – which is why India is sometimes called a ‘flailing state’. BJP promised in 2014 to change all this via ‘maximum governance, minimum government’. It hasn’t done so. But it still has a chance.

Covid will be gone one day. But the citizen’s day-to-day misery, coping with rotten institutions, will remain. If BJP wants to redeem some of its lost shine before 2024, it must focus on reforming some of our shoddiest institutions. Before Covid 2 struck, the FM had proposed an inspiring Union Budget that focussed on job-creating growth via infrastructure spending. Joe Biden, the US president, followed suit with a similar strategy in his stimulus package. Both recognised the best road to recovery from the Covid crisis was infrastructure investment, which is a multiplier, stimulating the private sector to invest, creating jobs, boosting consumption.

Unfortunately, infrastructure spending in India doesn’t deliver the full bang because it is executed via leaky government departments that focus on hardware – where kickbacks are available. Thus we get more roads, pipes, wires, buses. But water pipes don’t ensure 24×7 water supply; electric wires don’t mean reliable electricity; buses don’t create an effective transport system.

India needs modern, effective utilities that are autonomous, accountable, and creditworthy. Successful countries have created such institutions. We too have excellent examples at home to emulate. There is Delhi’s Metro in city transport; Concor in moving freight containers; Energy Efficiency Services Limited (EESL) in driving the nation’s switch to LED lighting; electricity companies in Delhi, Kolkata and Mumbai; and Shimla Jal Prabandhan Nigam Limited (SJPNL) for water and sanitation.

Shimla’s story is astonishing. The popular hill station was no different from most Indian cities in its water woes. You were in the shower and the tap would go dry; or washing dirty dishes, it always chose the worst moment. You scrambled to get a tanker. When the tanker got delayed, there was another scramble, sometimes even a riot. In the summer of 2018, Shimla’s woes hit a peak: You got water only once a week. A jaundice epidemic broke out, tourists ran away, hotels closed, business down on its knees. It felt like a ghost town.

Up against a wall, the municipal corporation acted with staggering wisdom.  It set up an autonomous utility company to manage both water and sewerage, accountable to citizens for service and to outside lenders for financing. It replaced leaky pipes; upgraded old pumps that lifted water thousands of feet from river valleys; established higher pay-for-what-you-use tariffs, monitored by meters; subsidised the poor via a ‘lifeline slab’ of cheap water; brainwashed consumers on how to save water and water bills. It made the same dramatic turnaround in sewerage. Soon, Shimla achieved the unbelievable:  24×7 continuous water in all three test wards and much enhanced water supply, clean sanitation throughout the city.

Tourists and businesses came running back. Shimla topped the most liveable small city index. The secret of Shimla’s success was a dramatic change in governance. Instead of managing water and sanitation via myriad government departments, the town created a modern utility with an autonomous CEO; he didn’t allow water to be stolen (as much as a third had been stolen earlier) because he was insulated from political pressure and had to remain creditworthy for future financing.

India needs such institutions to manage its infrastructure – its electricity, ports, highways, even healthcare. Whether these institutions are publicly or privately owned or public-private partnerships doesn’t matter. The key is that they should be autonomous, with a firewall against meddling by politicians and bureaucrats.

The FM’s mantra should be ‘Don’t fix the pipes; fix the institutions that will fix the pipes.’ She should make her infrastructure largesse conditional to such institutional reform. She should not fund specific projects but fund effective, accountable utilities like SJPNL to execute the projects. Her reward will be the absence of government departments standing at her door with a begging bowl. Being creditworthy, the utilities will leverage domestic and global financial markets; they will float bonds, tapping long-term finance. Thus, India will deepen its bond market.

Who will be losers in this reform? Bureaucrats, politicians, and unions – a formidable interest group! Politicians won’t be able to give away free electricity to farmers. Bureaucracy, in any case, is allergic to reform – it’s a cunning survivor and will do anything to preserve its power. Since employees of the modern utilities will have to adopt a new work ethic, it will send the unions into the trenches. All three vested interests will be ready to do battle. It won’t be easy.

Luckily, people will be on the reformer’s side: the prospect of 24×7 water and 24×7 electricity is nirvana in India. The lesson from recent agricultural reforms is that you must carry the people in a democracy. So, the smart reformer must sell the reforms before doing them, get the people on his side. Finally, it may seem odd to be reforming in this horrific Covid crisis, but reforms generally happen in a crisis. So, don’t waste this crisis, prime minister! 

Source: Times of India

Can Covid shift our politics? It’s a national emergency now. Let it bring to an end our Age of Hatred 25 Apr 2021 3:04 AM (3 years ago)

 The Times of India | April 2021 

The dreaded second wave of the coronavirus has created a national emergency. You’d think it would have united our republic, but India remains hopelessly divided. A straightforward problem of vaccinating our people becomes the subject of political football. While aam admi scrambles helplessly from hospital to hospital in search of oxygen, a bed, a ventilator, our political parties behave like prehistoric tribes, fighting elections as though they are battles for extinction. They don’t even share a common vocabulary to empathise in this Age of Hatred.

A curious political drama unfolded in four acts last week. The background was a sudden realisation that India, the world’s largest producer and exporter of vaccines, faced a grave shortage of Covid vaccine. The state hadn’t contracted in advance, nor offered a price that would have incentivised vaccine makers to build sufficient capacity. It hadn’t learnt from past mistakes.

In the first month of Covid, government had restricted testing to state laboratories. The infection was spreading, government labs couldn’t cope, India was repeatedly cited for testing failure. Realising its mistake, the government liberalised. It allowed in the private sector and testing took off via many competitive services, including home visits by skilled professionals, monitored by an excellent app.

This lesson was forgotten in the vaccination strategy. Early on, the state should have trusted private hospitals, resident associations, companies and NGOs to implement a vigorous vaccination programme via dual pricing – free vaccine for the poor at government hospitals and a market price at private hospitals, where people are willing to pay for healthcare. Vaccine makers would thus have recovered lost profit from supplying to the state.

The first act of the drama opened on April 18 when former PM Manmohan Singh wrote a sensible letter to PM Narendra Modi, suggesting ways to ramp up the vaccination programme. His plan included placing immediate orders backed by funds to vaccine producers; allowing the import of vaccines cleared by credible authorities abroad without insisting on Indian trials; and giving the states greater supply and freedom to decide whom to vaccinate.

In the second act, Singh’s well-meaning letter provoked an uncharacteristic rant from the Union health minister Harsh Vardhan, who accused the Congress of contributing to the second Covid wave by creating irresponsible hesitancy of the public against the vaccine in some Congress-ruled states. He said that while shaming the vaccines publicly, Congress leaders “took their doses in private, quietly”. Whatever the truth, this was not the place or the way to say it.

The third act in the drama was Centre’s dramatic announcement on April 19 of a significant change in the vaccination strategy. Given the relentless surge in infections, the government accelerated its vaccination programme; reversing its earlier strategy, it liberalised its stance to the private sector, allowing half the vaccines to be sold at market price, and giving greater flexibility to the states. Many of Singh’s suggestions, already under evaluation for weeks, were part of the new strategy.

In the fourth act vaccine manufacturers responded quickly, promising rapid gains in capacity, bringing down dramatically the time to vaccinate India’s population. Rahul Gandhi attacked the policy for “no free vaccines for 18-45 year olds, middlemen brought in without price controls”. Sonia Gandhi termed it “brazen profiteering from misery”. The policy set off a vigorous debate in the media. The curtain came down on the drama when Bengal CM Mamata Banerjee blamed Modi for manufacturing the second Covid wave to win the Bengal election.

What lessons can we draw from this drama? Harsh Vardhan is a soft-spoken, likeable man. His sarcastic reply to Singh points to a deeper disease in the polity. Democracy accepts differences and disagreement but under the basic rules of cooperation. Today, there is such rage, hatred among opponents, it’s an uncivil war. Mamata’s bizarre remark makes sense only if you believe the Bengal election is a battle for extinction. Until recently, politicians didn’t think of election defeats as permanent; the loser went on to fight the next election.

A second lesson: India’s politicians may have divided the republic but they remain united in an excessive faith in the ability of the state. They distrust private citizens, private enterprises, private NGOs. Had they trusted society and the market, the initial testing and vaccinating strategies would have been more sensible. Instead they trusted the bureaucracy, which has let them down in the second wave. It could have simply co-opted the army, set up mega Covid centres in stadiums, and avoided the panic and the tragedy. Congress’s response to the vaccine strategy was, of course, typically statist in its ignorance and contempt for the private sector.

Three, those who believe India is no longer free, ought to have witnessed last week’s exuberant debate on the vaccine policy. It was not only Congress, but criticism came in abundance from economists, policy wonks, and of course, the argumentative Indian went berserk on social media. These are not signs of an unfree country.

Four, Harsh Vardhan’s unfortunate reply was also defensive. Because BJP has long been the object of condescension by the old elite, it harbours deep resentment. Congress has been in power so long, it has an unconscious belief in its own superiority. With noblesse oblige, it treats BJP contemptuously as the nouveau riche.

The end result is a faultline defined by a lack of mutual respect. Eradicating contempt is a bit like trying to save a failing marriage. But when the nation is at stake, it is the people who suffer. And indeed, they are suffering in these dreadful Covid times in an Age of Hatred.

Source: Times of India

A tale of two heroes: An Ashoka University donor on the challenges of doing good in today’s world 25 Mar 2021 2:21 AM (4 years ago)

 The Times of India | March 2021

Pratap Bhanu Mehta, professor of political science and a passionate critic of the government, resigned from Ashoka University last week because he felt he’d become a ‘political liability’. The media has portrayed it as a morality tale of good versus evil but, in fact, it’s a tragedy.

It’s a tale of two modern Indian heroes: one courageously showing truth to power; the other idealistically trying to build a better world; both performed their duties, doing what he had to do; but it all ending badly. The ‘tragic flaw’ was not the rottenness of the court of Denmark but the imperfect world outside – an authoritarian state, tribal political parties, uncivil wars in an Age of Hatred – forces beyond the heroes’ control.

The first hero, Ashish Dhawan, had a dream – to create a world class, non-profit liberal arts university with half the students on free scholarships. He grew up in a professional family in Kolkata. After finishing his schooling at St Xavier’s he got a scholarship to Yale, where he experienced the wonders of a liberal education. He went on to Harvard Business School and from there to the investment world.

At 30 he returned to India, set up ChrysCapital, a venture capital firm, with the mission to nurture Indian startups. This is when we first met – he invited me to join his board. A dozen years later the firm was hugely successful, and Dhawan quit at the peak. Energising a bunch of similar idealistic, successful entrepreneurs like himself, he began to pursue his dream. For the past ten years, he’s been giving away his millions, passionately building Ashoka University.

The other hero of the story is Pratap Mehta, who grew up in roughly similar circumstances in a Jain family in Jodhpur. After schooling at St Edwards in Shimla and St Xavier’s in Jaipur, he got his BA at Oxford and a PhD in politics from Princeton. He went on to teach at Harvard where we first met. He returned to India, headed the Centre for Policy Research, making it a premier Indian thinktank, famous for intellectual honesty and rigour. But he built his formidable personal reputation as the author of elegant, forthright observations in his closely read weekly column.

Ashoka, meanwhile, was quietly laying the foundations of excellence in liberal education. I was invited to deliver a lecture there and was blown away by what I saw. I decided to become ‘a founder’, donating my own savings to Ashoka. In 2017, Ashoka invited Mehta to join as vice-chancellor. I thought it was a perfect marriage.

Soon, however, there was trouble. His strong views about the government were beginning to worry the university; Dhawan, however refused to stop Mehta in any way. I remained a distant cheerleader, unaware of the storm brewing, until one evening I was asked for advice. I suggested he continue to write vigorously but delete ‘Ashoka’ from his byline.

In 2019, Mehta decided to step down as VC but continue as professor. One afternoon, as we discussed my favourite project – to create a world-class department of Indology and Sanskrit at Ashoka – he said he had trouble “balancing his administrative duties with his academic interests”. He had “unlimited freedom” but little time to teach. Ashoka, he said, “was an extraordinary success story … Its commitment to academic values, the integrity of its processes, and the extraordinary talent it has assembled make it a truly special university.”

I felt all was well. So, imagine my shock when I learnt last week that Mehta had resigned from Ashoka. The following day, Arvind Subramanian quit in sympathy because Ashoka was “no longer able to protect academic freedom.” 90 faculty members expressed solidarity with Mehta. 150 academics from Harvard, Yale, Columbia, LSE, MIT, you name it, questioned Ashoka’s commitment to freedom. Students announced a two-day boycott of classes. Ashoka’s reputation had been indelibly stained.

No one seemed to know why Mehta resigned. I discovered there hadn’t been any pressure from the government. Many of the 150 donors of Ashoka, however, were offended by Mehta’s weekly bashing of PM Modi and the state. Not surprising, donors are conservative. The university worried that if funding dried up, the university might have to cut scholarships, raise student fees, freeze faculty salaries, chop new academic programmes. Still, no one asked Mehta to resign or to stop writing. But Mehta himself began slowly to realise that he was becoming a political liability. In an act of integrity, he resigned. Dhawan had mixed feelings. As a genuine liberal, committed to dissent, he felt sad. But as a protector of his baby he felt relieved.

The tragedy then is this: two good men, both doing their duty, were caught between conflicting loyalties, ended in wounding a promising fledgling institution. Ashoka has been damaged, diminished in the global academic world – it won’t be easy to attract world-class faculty in the future. The tragedy is bigger – India desperately needs to create world-class institutions and this is a setback to the nation’s ambitions.

The consolation is this hasn’t happened for the first time. Even Harvard and Yale, when they were young, faced similar challenges. The redeeming power of tragedy is to cleanse our emotions and seek renewal. There’s too much that’s good at Ashoka, bursting with creativity. After much soul searching, Dhawan has publicly admitted to lapses and there’s genuine commitment to change. A firewall is being erected between the founders and the institution; an Ombudsman is being appointed. Having gone through agni pariksha, I’m convinced that Ashoka will rise again.

Gurugram Inc won’t expand in Haryana anymore, eyeing hubs like Noida now 10 Mar 2021 12:04 AM (4 years ago)

 The Print | March 2021

With its job reservation bill, the Haryana government led by BJP Chief Minister Manohar Lal Khattar has scored a self-goal. Haryana will lose out in the end if it goes ahead with its plan to reserve 75 per cent jobs in the private sector for the local people. While there are several challenges to implementing it, the real worry is that companies will abandon Haryana. The industry fears that Haryana, from being a competitive, attractive state, would become an uncompetitive, unattractive state to do business in.

It will lead to flight of capital from Haryana

The obvious example is Gurugram, Haryana’s most dynamic hub of job creation and industrial growth. Gurugram has become globally competitive on the back of IT and IT-related services. Because of this, people in Haryana have benefited enormously from this prosperity. Gurgaon is an amazing miracle, like Bangalore. And those who think it’s a small bunch of IT people are mistaken. The economic multiplier works in such a way that a person in an upwardly mobile job creates 3-5 indirect jobs through consumption. And local people benefit from that job. The prosperity runs right through the economy. With this new law, top persons in the information technology industry have already begun to talk about Noida and other places to expand their businesses in. Their regional headquarters may stay in Gurugram, because the law does not affect existing industries, but many big companies are saying they just will not be able to operate under the circumstances of this reservation.

In another industry in Gurugram, I know of a design-based company that needs highly skilled designers. During its hiring process last week, the company managed to find one such person, but she was living in Noida. Since her salary was below Rs 50,000, the company would not be able to hire her under the new law. Yes, the law does allow exceptions, but they’re afraid the process of seeking approvals would mean delays, corruption, and the whole burden of managing a new form of license raj. Since they need highly skilled people, they usually find them in different corners of India. In their case, exception-seeking would have to be the rule. Since their main capital is skilled human capital, not a big factory, they feel it would make sense to just move their business out of Haryana. So, what we are looking at is a flight of capital from Haryana.

A new form of License Raj will bring anxiety to job seekers

After all the fine work Haryana has done for the ease of doing business, which attracted masses of companies, it is now taking a step in the opposite direction. With this law, the  government has enhanced the discretionary power of officials. In the process, it has landed its officials with a headache — how to decide if someone is a Haryanvi? What about a person whose one parent is from next door in Delhi or neighbouring Punjab or UP and the other parent is from Haryana? What about the case where one eighth of your blood is non-Haryanvi? Officials in Nazi Germany used to face this dilemma, and a person with even one sixteenth Jewish blood was considered a ‘Jew’ and would be killed.

In order to implement this law, state officials will ask you for proof if you are a Haryanvi. This will create anxiety among all job-seekers. How will a poor Haryanvi get such a proof in a country without documents? Even upper and middle class people don’t have marriage certificates. Suddenly, you will make a person of mixed blood into a despised foreigner. An industrialist with a moral conscience doesn’t want to be part of a mindset that divides Indians — demonising some people, valorising others. Another reason why many will leave Haryana.

It will fail in the courts

Before this happens, however, industry will go to court, and argue that it is illegal. Deputy Chief Minister Dushyant Chautala’s article in ThePrint says that the government is within the law but there’s enough legal precedence to show that it violates Article 14 on ‘equality before law’ and Article 19, which allows everyone to live and work anywhere in the country. Even the Andhra Pradesh case, which is in the high court, is likely to be struck down. Haryana’s politicians, indeed India’s politicians know this well and this is the cynicism behind this move. They will go back to their constituencies and say to the people, ‘Look, we tried to do it, but our hands were tied. We couldn’t do it because of the wretched courts’.

It undermine’s Modi’s vision of one India 

This law is especially embarrassing to Prime Minister Modi and his vision of ‘one India’. It’s a slap in the face of the Rashtriya Swayamsevak Sangh (RSS), when its own chief minister in a BJP ruled state is creating ‘tukde tukde’. The 75 per cent domicile law demonises the migrant. Many of us remember the damage the Shiv Sena has done to the ‘open arms’, cosmopolitan culture of Mumbai. In support of jobs for Maharashtrians in the 1970s, it demonised South Indians, beating Tamils in Matunga and Dadar. In the 1980s, Shiv Sainiks started attacking Sikh taxi drivers. In the ’90s, it was the turn of the Biharis and UP bhaiyas.

This is real ‘tukde tukde’ because you are no longer proud to be an Indian — the regional identity supplants national identity. As the feeling of being Indian fades, you begin to see the migrant worker as ‘a foreigner in my state’. It’s a pity because studies on migration show that migration is a symptom of a nation’s dynamism. Not only will this law bring economic loss, it will promote social disorder. The irony in all this is that Haryana, more than any other state, has benefitted because it was part of something bigger — because of its proximity to Delhi and Chandigarh. From a sleepy village, Haryana became part of greater Delhi/NCR, benefitting enormously from the energy and prosperity of the whole region.

It will slow national recovery

There has been a palpable change in direction in the last year at the Centre. Modi has finally begun to deliver on the reforms that brought him to power in 2014. There have been reforms in labour laws; the corporate tax rate has been reduced to levels that are now in line with our competitor nations; there has been an investment-oriented, job-creating Budget. Even as political parties were clamouring for Covid giveaways, the Modi government did the right thing for the long term — choosing to create jobs. The reforms in agriculture are our ‘1991 moment’. Despite opposition from vested interests — rich farmers and arhatiyas in Punjab and Haryana — the government hasn’t caved in. Finally, to get money for Budget 2021, the government has bitten the bullet, gone for privatising the holy cow, the public sector. Yes, privatising! No euphemisms, no reform by stealth. This has changed the mood of the industry. We can now begin to believe in the serious business of growth. But in one go, this proposed reservation law could undermine this mood, creating doubts in the minds of investors: is India once again returning to the bad ways of the old license raj?

Haryana govt’s claims don’t hold

The reasons given by Dushyant Chautala are specious. The law will not benefit employers; it will harm them. He says that the new law will provide a qualified workforce, which will enhance efficiency. But only if you hire the best available do you enhance efficiency. If you are forced to hire local people and if they are not equal to the best available, then you are limiting yourself. Dushyant Chautala also talks about reducing absenteeism. The reality is that migrants have less day-to-day absenteeism; they are more motivated than the local people. Also, his claim that the law will reduce crime rate is basically saying that migrants are responsible for crimes. This too is a false claim. He is playing with fire when he demonises migrants, as the Thackerays did in Bombay. This will only bring violence to Haryana and make it less attractive for investment.

Dushyant Chautala says that other states are doing it. Well, two wrongs don’t make a right. Besides, the courts will throw out those laws in all the states. He has mentioned a ‘sunset clause’ of ten years , which is a good thing. All laws should have a sunset clause. But the reality is that it’s very difficult to roll back something once you have given it. Politicians know it. After 10 years, politicians will find ways to extend the law, knowing that undoing cheap populism is equal to committing political suicide.

Why are bad, self-defeating laws legislated?

Politics and economics don’t converge necessarily. Economic policy delivers in the long term — it’s a five-day Test match. But politics is short-term game — it’s a T20 match. In politics, you have to get elected at any cost, and you have only a few years to deliver. Thus, the interests of politicians and economic reformers are often different. A politician, like NT Rama Rao, got elected by promising Re 1/- rice and he bankrupted the Andhra Pradesh treasury. Punjab’s politicians promised free electricity to farmers, again bankrupted the state, but also through excess use of water made one of the richest states significantly poorer. Because of the mismatch, it is difficult to do reforms in a democracy but it’s also why self-defeating laws like the 75 per cent reservation in Haryana are enacted.

Don’t kill 2nd green revolution: Rolling back farm reforms would privilege a small but vociferous group over the silent majority 2 Dec 2020 10:19 PM (4 years ago)

 The Times of India | December 2020

The current protests by Punjab’s farmers hold many lessons. One of them is that politics is a short game, a T20 cricket match, while economics is a long term, five-day Test match. Punjab’s farmers are playing the former while the government is playing the latter, which makes it frustrating for the two sides and for spectators in the stands.

Because of this mismatch, a second lesson is that it’s difficult to reform in a democracy. A populist who promises rice at Re 1 per kg will usually defeat the reformer at the polls. Hence, successful reformers spend more time selling reforms than doing them. India’s reformers have failed in this regard, which is why 29 years after 1991, India still reforms by stealth and Indians cannot distinguish between being pro-market and pro-business. They continue to believe that reforms make the rich richer and poor poorer, despite so much evidence to the contrary.

Prime Minister Narendra Modi, one of the world’s great communicators, forgot this lesson and didn’t win the nation’s support for the three farm bills before enacting them in June. His government resorted to stealth, pushed the farm bills through Parliament without talking to the opposition, states, or farmer organisations. This led to false rumours that the price subsidy (MSP) and government procurement would go away soon and corporate farming would replace peasant farming. He can still repair this damage.

A third lesson is that a small, organised, and well-funded group in a democracy can hijack the nation’s interest when the majority is silent and unorganised. Behind the protests are arthiyas, buying agents in APMC mandis, who stand to lose Rs 1500 crore a year in commissions, plus rich farmers of Punjab, who are part of the 6% of India’s farmers who benefit from the MSP regime, according to the 70th round of the NSS. Both are powerful. The arthiyas finance elections, are often politicians and leaders of farm unions.

The three farm laws offer three basic freedoms to the farmer. One, he can now sell anywhere to anyone, freeing him from having to sell to a monopoly cartel at the APMC mandi. Second is the freedom to store inventory which was constrained so far by stocking limits in the Essential Commodities Act. This gives incentive for cold storages to come up, to whom farmers can now sell directly. Third, it gives farmers freedom to make forward contracts, transferring their risk to businessmen, leading hopefully to a freedom to lease unviable lands for a job and a share in profits.

The Agricultural Produce Marketing Committee (APMC) is an obsolete institution from an age of scarcity, meant to protect the farmer but becoming his oppressor, a monopoly cartel fixing low prices for the farmers’ produce, forcing distress sales. The reforms have broken this monopoly and since June, out-of-mandi farmer sales have grown sharply while mandi transactions have plunged 40%. This reform needs to be followed up with a stable policy on exports, unlike the present ‘start-stop’ policy, under which onion exports were recently banned. This is why farmers hanker after MSP.

It’s good news that farmer unions and government have finally begun to talk. The main demand of Punjab’s farmers and activists supporting them, is to make the minimum support price a legal right. This is a bad idea because it makes Punjab’s farmers produce what people don’t want and discourages them from growing what people do want. It results in overproducing wheat and rice and underproducing protein rich daal.

Every year, the nation groans under a mountain of excess grain, some of which is eaten by rats. Because of MSP, the Punjab farmer grows water guzzling rice, harms his soil, lowers his water table and kills thousands of people through air pollution from burning stubble. The Punjab farmer is not to blame. He behaves rationally – growing what he’s incentivised to.

By giving farmers freedom from irrational controls, the reforms seek to raise farmers’ incomes through higher productivity. Indian farm yields are only half or a third of our competitors. China, with half the arable land of India, produces double the crop. The problem is that 80% of Indian farmers own less than two hectares. These can become more productive by use of scientific methods and by growing high value crops. But it requires infusion of capital and technology.

The farmer, however, doesn’t have the money to pay for it. Nor does the government. Hence, the next reform should give farmers freedom to lease their lands to agri-professionals with capital and technology, and become in turn shareholders and workers on the same land, setting the stage for the second green revolution.

The downside to this scenario is a fear of big business taking over agriculture. The answer is for farmers to organise themselves in the form of cooperatives, or farmer-producer organisations like Amul that the PM has spoken about. It’s not easy to make a success of a cooperative, but there are enough examples to emulate.

The other fear of farmers – of MSP going away soon – is unfounded. Government has to point out that it needs to procure rice and wheat to supply lakhs of ration shops under the Food Security Act. Covid-19 has dramatically underlined the importance of the food security system in a time of crisis. No government can handle the political challenge of doing away with food security. It’s too big a risk. So, farmers can relax. But it doesn’t mean that MSP should become a legal right. In the ideal world, it would be far better one day to replace the entire system of agriculture subsidies – water, power, fertilisers and MSP – with a minimum basic income to the farmer. But that’s not going to happen anytime soon.

Doing good in India gets harder: Philanthropy should be regulated by an independent regulator, not by the home ministry 2 Nov 2020 10:20 PM (4 years ago)

 The Times of India | November 2020

Indira Gandhi’s Emergency was a tragedy in modern India’s history. A second tragedy was not to have undone the terrible laws enacted during the Emergency. One of these is the Foreign Contributions (Regulations) Act or FCRA, which was amended last month and has become more draconian.

Its purpose is to regulate funds received by charity groups from abroad. Its consequence, however, has been to create panic among lakhs of people in India and give a bad name to our country abroad. The latest amendment evokes images among international donors of the return of India’s dreaded licence raj. At one stroke, it has undone the good work of this government in the ‘ease of doing business’ as well as the positive atmosphere created by the recent agriculture and labour reforms.

Some international donors have begun to question if grants meant for India should now be diverted to more hospitable countries where philanthropy is more welcome. There are a number of provisions in the latest amendment but let me focus on two that are almost impossible to implement.

One forbids the transfer of a foreign donation to another organisation. I shall illustrate with a real life example. An international foundation discovers a major breakthrough to improve children’s learning in reading and arithmetic. It gives a grant to a reputable Indian NGO with expertise in education to implement the programme. The latter selects ten outstanding local NGOs in the states, each with a proven record of working with schools to execute such a project. This FCRA amendment has now declared this collaborative programme illegal. There’s panic across India as thousands of local NGOs with lakhs of employees now face the prospect of closing down.

Many scientific research projects that depend on external funding face the same future. India’s green revolution wouldn’t have occurred under this FCRA amendment because the Rockefeller Foundation, which discovered the high yielding hybrid wheat in Mexico, wouldn’t have been able to sub-grant to implement the programme in the field.

The timing of this amendment is also ironic. When India is battling a deadly virus and the prime minister has applauded NGOs for their stellar role in delivering urgent relief, the regulator has decided to punish them. The NGOs were able to set up shelters and feeding centres for migrant workers with unimaginable speed precisely because modern philanthropy works in a collaborative way by sub-contracting field execution to smaller NGOs.

A second provision has put a cap of 20% on overhead expenses. Again, it misunderstands how civil society works. Those NGOs who run research institutions, schools, hospitals, and shelters out of foreign funds will now have to prove that most of their employee expenses are non-administrative. More difficult will be the job of NGOs involved in capacity building of state governments. The salaries of these employees will be termed as ‘overheads’ because their employees don’t interface with ‘beneficiaries’ but train government employees instead, who in turn deliver benefits to beneficiaries.

After this fiasco, the government should question if such a law from the Emergency era is needed. In practice, all foreign remittances – to persons, to industry, to civil society – are controlled by the finance ministry under Foreign Exchange Management Act. Why should charitable contributions be controlled by the home ministry under FCRA? If the purpose is to control terrorism, there is already the FATF (Financial Actions Task Force) to do that.

Most countries control terrorist funding through FATF type mechanisms. Moreover, NGOs are already regulated by many existing controls – Prevention of Money Laundering Act regulated by RBI, income tax and 12A certification, 80G certificate, Charities Commissioner, Registrar of Companies. In fact, the government did once consider scrapping FCRA in the early 1990s in the spirit of liberalising the economy.

If the law can’t be scrapped, why should the home ministry be burdened with regulating philanthropy? The home ministry is a well-meaning policeman, trained to distrust people, and its natural reaction is to use force. Wouldn’t it be better to entrust the regulation of civil society and philanthropy to an independent regulator in a department such as economic affairs in the finance ministry? It would then want to implement finance minister Nirmala Sitharaman’s excellent promise in 2019 to create an electronic fund-raising platform, a transparent social stock exchange under SEBI for listing social enterprises and volunteer organisations. This change would make it easier for both: For those trying to do good in India and for the home ministry, freeing it to do its job of catching terrorists.

There’s no point in blaming BJP alone. UPA made the FCRA law harsher in 2010 by extending its net to cover more civil society groups. In 2012, three NGOs lost their licence during the protest against the Kudankulam nuclear power plant. BJP went further to make compliance more onerous by increasing e-filing requirements and making licence renewal more difficult. Both political parties were complicit also in breaking the FCRA law. In 2014, the Delhi high court found them guilty of illegally receiving foreign contributions. The law was quietly amended to make it easier for political parties to accept foreign funds.

Vidura, royal counsellor in the Mahabharata, explains to King Dhritarashtra that raj dharma begins and ends with doing good to the people. A king enacts a law to catch a thief but if that law ends in harassing lakhs of innocent people, it is adharma. When this government implemented ‘self-attestation’, it was an act of dharma. But this FCRA amendment is an act of adharma. Without meaning to, the government has created fear among lakhs of idealistic, committed young people and is about to throw the baby out with the bathwater. Now’s the time to practise ‘maximum governance and minimum government’ and undo this damage.

India’s language conundrum: The National Education Policy has skirted elegantly a political minefield. But the obstacle is the teacher 16 Sep 2020 10:40 PM (4 years ago)

The Times of India | September 2020

 In 1947, a weary Britain packed up and left India, leaving behind absent-mindedly the English language and a headache for Indians. Ever since, we’ve been quarrelling over the place of English in our lives, particularly in what language to teach our children. The latest to join the debate is the National Education Policy (NEP), which to its credit, has skirted elegantly a political minefield, coming up with an answer that has satisfied almost everyone, offending only those who insisted on being offended. But the obstacle is the teacher.

At the root is a conundrum based on two facts: One, children learn best in the early years in their mother tongue; two, if a child isn’t fluent in English by age 10, she’s disadvantaged for the rest of her life, especially in getting a job. There’s plenty of research to support both facts. Nativists and educationists focus on the first, practical parents on the second.

The answer is simple: Teach the child in grades 1-5 in the mother tongue but also give a strong dose of English to ensure the child is fluent by 10. Since a child is naturally bilingual, this is possible. Have a dual medium of instruction – teach the arts in the mother tongue; the sciences in English. The practical problem is the average Indian teacher cannot teach, not just in English but in any language. 91% of 7,30,000 teachers tested in 2012 failed the basic teacher eligibility test. This is not a failure of policy but of governance.

NEP, through brilliant drafting, has given freedom to states, schools and parents. While strongly recommending learning in the mother tongue, it has refused to ban English medium schools. Its framers were mindful of damage done in Bengal, Gujarat, UP and other states that had banned English earlier in primary schools and decimated the futures of a whole generation. Having missed the IT revolution, all these states have made a U-turn. Mamata Banerjee destroyed communists in Bengal on this issue. Yogi Adityanath proudly reintroduced teaching English in primary schools in UP.

BJP-RSS, by accepting NEP, has in effect conceded defeat. One of its oldest, dearest projects was to rid India of English and make Hindi the national language. Just last year, Amit Shah pushed the case for Hindi. But the Sangh Parivar has lost its convictions – its own sons and daughters want to learn English and get a good job. Imposing Hindi today is a vote loser.

Sometime in the 1990s, India’s mindset changed. The constant whining against the colonial language died and English became an Indian language. A middle class of aspirers came up after the economic reforms. Confident in its own skin it regarded English not as an alien imposition, but as a skill to navigate the global economy. With the IT revolution, parents began to move their children from government to private schools that taught English. Today, 47.5% of India’s children are in private schools, making it the third largest school system in the world. In it, 70% of parents pay a monthly fee less than Rs 1,000 and 45% less than Rs 500. English has been democratised.

Meanwhile, English is even more dominant globally after the IT revolution. Linguists believe that whoever speaks a language owns it. They predict that India will soon have the world’s largest number of English speakers. Given the proliferation of Indian writing in English, they foresee Indian English becoming a widely spoken variant like American English.

NEP rightly reminds us, however, of the virtue of bilingualism and let’s hope we’ll do a better job this time. The last time, it led to a tragic social divide. The well-off kids, led by the Khan Market gang, went to English medium schools and aam admi’s kids in Sadar Bazaar went to Hindi (or regional language) medium schools. The former became brown sahibs and the latter were condemned to be ‘deaf’ in any serious discussion in business, government, or the university. HMT, ‘Hindi medium type’, became a slur. English became the new Sanskrit, the language of exclusion. In the charming film Hindi Medium, Irrfan Khan makes heartbreaking attempts to get his daughter into an English medium school. Frustrated, he says, “India is English, English is India.”

Back to the conundrum: The rise of English shouldn’t be at the expense of the mother tongue. Language is not just for communication; it’s a source of new ideas, new emotions. I cannot think and feel without language. There are certain emotions I feel in Punjabi that I don’t in English. Since a child is naturally bilingual, India should aim for bilingual instruction. Today, technology can help. There are a number of interactive apps on our phones, such as Hello English, that can make one fluent in English and become teacher aids. It’s also possible now to have bilingual teachers since teacher salaries have risen to respectable levels.

The NEP envisions teaching becoming a true ‘calling’ and has even proposed a four-year BEd professional degree. But India’s problem remains governance. Unqualified teachers have proliferated, hired not on qualifications but by paying a bribe. A chief minister is serving a 10-year jail sentence for selling teaching jobs to 3,206 teachers. Once hired and protected in this way, teachers don’t feel they need to teach and are routinely absent. Unless state governments fix this problem, no amount of good policy making will help the Indian child to realise her future.

One and a half cheers: National Education Policy promises much, but fails to come to grips with India’s education crisis 31 Jul 2020 11:22 PM (4 years ago)

 The Times of India | August 2020

There is so much good in the recently announced National Education Policy (NEP) that it seems churlish to point out its failings. It will receive well deserved applause. However, the truth is that it has failed to come to grips with the crisis in Indian education. I will focus only on schooling, the crucial foundation of the edifice. Instead of three cheers, I am afraid I can only offer it one and a half.

NEP has many excellent recommendations. It clearly shifts the focus away from inputs to outcomes. It junks rote learning in favour of critical thinking, conceptual and creative skills. Its best feature is to launch a mission to achieve basic language and math skills by Class 3 for all children by 2025. Tracking a student in Classes 3, 5 and 8 through a reliable, standardised assessment will help improve her performance, allowing her parents to make an informed choice among schools.

Finally, it separates government’s role into two bodies, one that regulates education and a second that runs state schools. Thus, it overcomes a conflict of interest which has forced regulators to gloss over the disastrous performance of state schools while shackling private schools in a penalising licence raj.

With all this, why doesn’t NEP get three cheers? Because it hasn’t honestly faced the ground reality of these eight facts. Fact 1: One out of four teachers is absent in state schools across India and one in two, who is present, is not teaching. This is not because of low teacher salaries – starting salary of a junior teacher in UP last year was Rs 48,918 pm, or 11 times UP’s per capita income.

India faces sophie’s choice: The government’s tragic lockdown dilemma is that it has to pick between lives 16 Apr 2020 11:23 PM (5 years ago)

 The Times of India | April 2020

The old idea that civilisation is destroyed from within, not from without, has been turned upside down. In just a few weeks a virus ten-thousandth of a millimetre in diameter has spread around the world like wildfire from a market in Wuhan, to threaten our civilised order. How we respond to the moral dilemmas raised by Covid-19 will reflect on our values and the number of lives we save.

The first dilemma: Given its horrific cost, was the lockdown necessary? President Donald Trump in America and Prime Minister Boris Johnson in the UK dawdled and both nations paid a heavy price. Johnson considered an alternative: Allow the virus to spread until most people get infected and become immune; with herd immunity, the outbreak would fizzle out. When told that 2,60,000 people would die so that the rest of the UK could live, he backed off.

India’s choices also became clear when faced with the consequences. Epidemiologists’ models predicted around 400 million Indians would be infected by end July – with 40 million severe cases – and at the peak, 10 million patients would have to be hospitalised. But India has only 1,00,000 intensive-care beds and 20,000 ventilators. Creating herd immunity would mean about half of India would need to be infected, and with a 1% mortality rate 6.5 million would die. This is not an imaginary exercise: 17 million Indians actually died in the 1918 Spanish Flu. Lockdown is, thus, the only answer.

The lockdown has worked in China and the world is implementing some variant of it. But social activists like Harsh Mander have argued against it because: 1) it would hurt the poor unconscionably; 2) social distancing is not possible in crowded India; and 3) Covid-19 cases in India are tiny. This reasoning is flawed. The lockdown will slow down the virus’s spread, which will help the poor far more by improving their chances for a hospital bed. India’s Covid numbers are small so far because we are not testing enough people. Our death numbers are also low because India typically records only about 25% of deaths, many of which might show up in records as respiratory distress, not Covid.

During this lockdown, a poor migrant from Bihar was heard to say, ‘If corona does not kill me, losing my job and hunger will.’ He expressed the tragic choice facing the desperate government: ‘Who should live and who should die?’ Even if India manages to contain deaths through lockdowns, the coronavirus is likely to spread until a vaccine or cure is widely available. Extended or multiple lockdowns will bring mass unemployment and a brutal recession.

The worst affected will be half a billion daily wage earners, many of whom may die of hunger. The cost of welfare packages will destroy government’s finances, already weak after a terrible slowdown. The pandemic could turn India back by decades, killing the hopes of a generation. From a fast growing middle income economy, India could become a desperately poor nation.

The dilemma is in the old adage: Is the cure worse than the disease? Some states in the US have appealed to this maxim by justifying not locking down. Texas Lt Governor Dan Patrick added another dimension by suggesting that the elderly should be willing to die in order to save the young. Can our moral intuitions justify such conclusions?

Framing the question as a trade-off between saving people from the virus but condemning those who survive to a life of hunger and poverty, you reach what Derek Parfit, the moral philosopher, called a ‘repugnant conclusion’. Both options are as offensive as Sophie’s Choice, when Meryl Streep has to choose between saving one of her children and killing the other. I too wondered if it was worth saving lives if the result was a world teeming with lives not worth living. But then I asked myself, would I choose to let my son die of Covid-19? My moral intuition was clear: I would choose to save a present life rather than worry about future lives. Vidura in the Mahabharata made the opposite decision and chose to sacrifice a person to save a village.

In the coming weeks, Indian doctors will face other dilemmas: With only one ICU bed, do I give it to a 20-year-old patient or a 50-year-old, both with equal chances of recovery? Current rules of triage prefer the young as their life is still unlived. Some would prefer the 50-year-old who has experience and skills and might contribute more to society. But we all agree that you don’t choose on the basis of wealth, caste, or religion. I would choose based on ‘first come first served’. Whatever the doctor decides, something of moral value is lost, leaving him scarred for life. After the crisis, we shall face other dilemmas. Currently surveillance apps/ data networks are helping governments to trace infected persons. How do we wrest this new power from the state after the crisis?

It takes centuries to create civilisation but only weeks to lose it. How our leaders cope with moral dilemmas reflects our values. Americans are paying a heavy price for Trump’s Covid scepticism. Winston Churchill diverted American food ships meant for Bengal’s famine to feed troops in Europe – think of his political standing after the war. It is difficult to be good in any age. But in the age of coronavirus it is especially important to respond rightfully to preserve our values.

India is free, its schools are not – Reform must have two legs: Autonomy for private schools and quality for government schools 5 Feb 2020 10:25 PM (5 years ago)

 The Times of India | February 2020

Another Republic Day has come and gone, with an unhappy reminder of the tragic gap between our aspirations and the harsh reality. For 70 years we have wanted our children to grow up into free thinking, confident and innovative Indians. But our education system has done everything possible to disempower them. It is a heart breaking sight to see long lines of parents waiting year after year to get their child into a decent school. Most of them are doomed to failure as there aren’t enough places in good schools.

Every year the Annual Status of Education Report (ASER) brings the sad news that less than half the students in Class V can read a paragraph or do an arithmetic sum from a Class II text. In some states, less than 10% teachers pass the Teacher Eligibility Tests. In UP and Bihar, three in four teachers cannot do percentage sums from a Class V text. No wonder India’s children ranked 73rd from 74 countries in the international PISA test of reading, science and arithmetic.

Because good government schools are scarce, parents are compelled to send children to a private school. Between 2011 and 2015 enrolment in government schools fell by 1.1 crore and rose in private schools by 1.6 crore, according to government’s DISE data. Based on this trend, there is a need for 1,30,000 additional private schools in 2020. But they are not opening. One reason is the great difficulty to start a school for an honest person. 30-45 permissions are required, depending on the state, and most require running around and bribery. The most expensive bribes are for an Essentiality Certificate (to prove that a school is needed!) and for Recognition.

Another reason for the scarcity is fees control. The problem began with the Right to Education Act. The government realised that state schools were failing and it commanded private schools to reserve 25% seats for the poor. It was a good idea but poorly executed. Since state governments did not compensate private schools adequately for the reserved students, the fees for the 75% fee-paying students went up. This led to a clamour from parents. Many states imposed a control on fees, which has gradually weakened the financial health of schools. To survive, schools have had to economise, leading to a decline in quality. Some schools have actually had to shut down.

The latest assault on school autonomy is the threat of a ban on private textbooks. In 2015, the HRD ministry advised schools to use only NCERT books published by the government. Parents worry about the decline in quality and late delivery of books. Oxfam reported that in half the schools they surveyed in 2015 in ten states, textbooks had not arrived. Although NCERT books have improved, the old rote method of learning persists. Teachers are oblivious of wonderful apps like Hello English and Google Bolo that could rapidly make an Indian student fluent in spoken English. Educationists fear that a ban will cut off Indian children from the learning revolution happening in the world, especially digital learning, and disconnect them from job opportunities in the knowledge economy.

Ironically, most high-performing education systems in Asia have gone in the opposite direction – to a liberalised multiple-textbook policy. This has improved student performance by breaking the link between one textbook and one examination. Since Asian teachers now have access to diverse materials, they use interactive teaching methods to develop critical thinking and problem solving in students. China moved away from a national textbook policy in the late 1980s and encourages the use of multiple local textbooks to “connect with real-life interests and experiences of students in a modern society”. In a liberalised system, a student doesn’t have to buy multiple texts – many countries rent books to students and reuse them for many years. Successful Asian countries routinely work with book publishers to continuously improve textbook content, curriculum and teacher training.

70 years into the Republic, it is time to give autonomy to private schools. The 1991 reforms gave freedom to industry but not to our schools, who are still groaning under the burden of licence raj. Despite all this, however, the contribution of private schools to the rise of India is incalculable. Their alumni fill the top ranks of professions, civil services and business. Their leaders have made India a world class power in software.

It’s time that India dropped its socialist hypocrisy that forbids a private school from making a profit. In order to survive, it must make a profit (and it does!). Profit allows it to improve its quality and to expand to meet the huge demand for better schools. This single change in designation from ‘non-profit’ to ‘profit’ sector could bring a revolution. Investments would flow rapidly into education, improving choice and quality. Principals would not have to lie or be called thieves. The Indian citizen today understands the value of choice and competition. Just as she pays for water and electricity, she is willing to pay for a superior education. In a free country, why should she be prevented from paying more for a school or buying a superior textbook?

Instead of over-regulating private schools, the state should focus on improving the quality of government schools. To begin with, it should separate its two functions: (1) to regulate education impartially, applying equal standards to both the public and private sector; (2) to run government schools. Today, there is a conflict of interest, which confuses the administrator and results in bad policies. It’s time to give freedom to private schools and look forward to a Republic Day when those long lines will be shorter and reality comes closer to our aspirations.

And now, the good news: Pessimism isn’t warranted. If you can take the long view, the world is getting better 13 Jan 2020 10:26 PM (5 years ago)

 The Times of India | January 2020

At the beginning of a new decade when so many are feeling so glum, Matt Ridley comes up with the astonishing claim that the past decade was one of the best. “We are living through the greatest improvement in human living standards in history,” he writes in UK’s Spectator. “Extreme poverty has fallen below 10% of the world’s population for the first time… child mortality has fallen to record low levels; famine virtually went extinct; malaria, polio and heart disease are all in decline….”

We don’t notice these changes because we don’t take the long view of history. We are obsessed with headlines of the day and good news doesn’t make headlines; hence, we don’t notice the quiet but dramatic changes taking place in peoples’ lives.

The long view is fine, but what about the rise of authoritarian leaders during the past decade – Trump, Putin, Xi, Erdogan, Modi, Boris Johnson, etc – and the rapid decay in the ideals that we were brought up to believe? Closer to home, what about the unfair citizenship law against which students are protesting across India? How can one feel good?

Ridley argues that many of the good things that make the world a better place happen despite the state. They originate in scientific breakthroughs and are then spread quickly by market forces. Take for example, the cellphone, which has empowered the world’s poor in unbelievable ways and has helped achieve universal banking in India.

And what about the environmental crisis? Ridley argues unfashionably that forests are expanding, especially in rich countries, because productivity of agriculture is rising so fast that human needs can be supplied by a shrinking amount of land. We use 65% less land to produce a given quantity of food compared with 50 years ago. By 2050, he claims that an area the size of India will have been released from the plough and the cow.

As a result, the population of wild animals is growing again – wolves, deer, beavers, lynx, seals, sea eagles and bald eagles. This is a very different story from what the scaremongers have been telling us in newspaper headlines.

When it comes to India, aren’t there legitimate reasons to feel depressed at the beginning of this new decade? Our economy is in serious trouble and Prime Minister Modi has lost valuable time in fixing it, distracted as he is by a contentious social agenda that endangers the nation’s secular and democratic foundations.

Students across the country are protesting against an unfair citizenship law and there is fear of a national register of citizens. The lockdown in Kashmir continues after five months with even pro-India leaders still in detention.

Against this, there is the long view which shows that more Indians are free from poisonous indoor pollution because they now cook with clean gas. More Indians have access to toilets at home and no longer defecate in the open, and this will liberate them gradually from environmental pollution and many health hazards, including child malnutrition.

More Indians are connected with pukka roads from their villages, have access to electricity, and have a bank account in which they have begun to receive direct benefit transfers. Because India has achieved annual economic growth exceeding 7% over the last 15 years, extreme poverty has declined to 5.5%, according to a report by the respected Brookings Institution.

I began to take Ridley seriously after reading his The Rational Optimist, a fascinating history of trade and innovation. Once a talented science writer, he has shifted his focus to the economy. Even though his faith in the market seems one sided – even more one-sided than mine – his two key concepts, gains from exchange and specialisation, rank up there with important economic ideas of all time.

He believes that gains from trade in the market make possible gains from specialisation, which in turn makes technological innovation possible. Steven Pinker, another science writer, has reinforced his optimism. Pinker argues that life has been getting better for most people based on 15 different measures of human wellbeing. People live longer and healthier than ever before and our fear of terrorism is exaggerated – an American, for example, is 3,000 times more likely to die in an accident than in a terrorist attack.

Both gifted science writers offer a tonic against prevailing pessimism. In a similar vein, Nature, the science journal, reports that an artificial intelligence system can now match or outperform radiologists in detecting breast cancer. It can catch cancers that were originally missed and reduce false-positive cancer flags for patients who don’t have it. Of course, doctors still beat the machine sometimes.

So, is the world getting better? And who should one believe – optimists or pessimists? Obviously, both the long and the short views of history are valid. Unhappily, the world is polarised between two ideologies and both sides have the deepest contempt for the other.

Clearly, there are good and bad things going on and one has to find a balanced perspective. In the end, how one feels on a particular day may come down to whether one is happier or angrier with the world.

I happen to be an unashamed member of the former troop and prefer to focus on the soft drama unfolding quietly in the heart of society, barely visible to the naked eye, and which is more difficult to grasp than the changing fortunes of political leaders and parties that is so absorbing. That doesn’t mean i am right. You may have good reasons to feel miserable and depressed. But try and not inflict these feelings on your neighbour who prefers to whistle cheerfully in the wind.

Ten steps to $5 trillion: Lesson from RCEP fiasco is that India must execute bold reforms to become competitive 2 Dec 2019 10:02 PM (5 years ago)

 The Times of India | December 2019

November 4, 2019 was a sad day. Prime Minister Narendra Modi decided to walk out of the Regional Comprehensive Economic Partnership (RCEP) negotiations at the eleventh-hour, admitting that India couldn’t compete with Asia, especially China. It was a big and painful decision as this is no ordinary trade agreement. Had India joined, RCEP would have become the world’s largest free trade area comprising 16 countries, half the world’s population, 40% of global trade and 35% of world’s wealth in the fastest growing area of the world.

India should have joined RCEP. The deal on offer was a reasonably good one and many of our fears had been allayed. Our farmers had been given protection from imports of agricultural products and milk (say from New Zealand). A quarter of Chinese products had been excluded, and for the rest a long period of tariffs was allowed from 5 to 25 years. The deal offered a unique safeguard from a sudden surge of imports from China to India for 60 of the most sensitive products.

If much smaller countries in Asia – Vietnam, Thailand, the Philippines, Laos, Myanmar – can compete and have joined RCEP, why can’t India? Why does it need tariff protection, normally meant for infant industries? Why are India’s companies still infants after 72 years of Independence? No nation has become prosperous without exports; open economies have consistently outperformed closed ones. The $5 trillion target cannot be achieved without exports. The lesson from this fiasco is that India must act single-mindedly and execute bold reforms to become competitive. We can still join RCEP by March 2020. Consider this period a pause to get our house in order. It’s never too late to do the right thing. Here are ten ways to make the nation competitive.

First, get over an inferiority complex and change our old mindset of export pessimism that has limited our share of world exports to 1.7%. Pessimists fear a growing trade deficit. They forget that low cost, high quality imports are necessary to join global supply chains. Competition from imports is a school in which entrepreneurs learn to hone their skills. Ditch the bad idea of import substitution that has made a recent comeback. ‘Make in India’ should be ‘Make in India for the World’. To the voices moaning about bleak global trade prospects: Vietnam’s exports have grown 300% from 2013 to 2018 while India’s have remained stagnant. India’s share of world trade is so small – growing it will bring acche din.

Second, lower our tariffs, which are amongst the highest in the world, and have worsened in recent years through nine rounds of tariff increases in the past three years. Smart countries have a sunset clause to every tariff. Cheaper inputs from abroad will not only make our entrepreneurs more competitive but will also improve domestic productivity.

Third, national competitiveness requires collaboration across a dozen ministries and the states. It cannot be left to the ill-equipped commerce ministry. It needs a high-powered initiative under a senior Cabinet minister. Like the US trade representative, the minister should be empowered to monitor and implement reforms across ministries to enhance competitiveness. No one listens to the commerce ministry.

Fourth, a key roadblock is red tape. Keep a relentless focus on improving the ease of doing business where the country has been rewarded with significant gains in recent years. Minimise the interface of officials and citizens by transferring all paperwork online. Reduce the time it takes to enforce contracts in particular, where India’s performance is amongst the worst in the world.

Fifth, let the overvalued rupee slide, say to 80 to a dollar, which will mitigate the many cost penalties that our exporters pay. Exchange rate should not be a badge of national honour but reflect sound economic sense and competitiveness. Meanwhile, keep lowering interest rates, bringing them closer to our competitors’ levels.

Sixth, reform our rigid labour laws that protect jobs not workers. Companies have to survive in a downturn. When orders decline, you either cut workers or go bankrupt. Successful nations allow employers to ‘hire and fire’ but protect the laid off with a safety net. India should have a labour welfare fund (with contribution from employers and government) to finance transitory unemployment and re-training. We should not insist on lifetime jobs.

Seventh, acquiring an acre of land for industry is not only lengthy but also expensive. The present law, enacted during UPA-2, requires hundreds of signatures. This bureaucratic nightmare needs to be replaced by a sensible law that was, in fact, introduced during Modi 1.0 but failed to pass the Rajya Sabha. Since Modi 2.0 has better numbers, it needs to be moved urgently.

Eighth, treat farmers as business persons, not peasants. Have a predictable export-import regime for farm products – stop the present ‘switch on, switch off’ policy which harms both farmers and foreign customers. Ninth, Indian entrepreneurs bear a huge penalty versus our competitors in the cost of electricity, freight and logistics. Stop subsidising railway passengers through freight; stop subsidising electricity to farmers through industry; and bring down taxes on aviation fuel that make air cargo rates highest in the world. Tenth, keep reforming our dreadful educational system, focussing on outcomes not inputs to produce employable graduates.

There is nothing new about these ten ways to make India competitive. Fortunately, India is in the midst of an economic crisis. A crisis brings urgency to reform as the government has shown by dramatically lowering corporate tax to competitive levels. Now is the time to act. And always remember that rule-based trade and open markets are the best way to lift India’s living standards and build shared prosperity.

In search of a conservative Indian: We are drowned today by the shrill noises from Hindu nationalists and left secularists 23 Oct 2019 11:00 PM (5 years ago)

 The Times of India | October 2019

The precipitous decline of Congress worries many Indians who believe that choice and a responsible opposition are important. Democracies elsewhere offer a choice between liberals and conservatives through a two-party system. Liberals prefer modernity while conservatives favour tradition and continuity; liberals want rapid change, conservatives prefer it to be gradual. Conservatives tend to be more nationalistic, religious and market oriented; liberals are more secular and oriented to social welfare. It isn’t easy to transpose these terms to India but it can serve a useful purpose.

In India, a single party has dominated since Independence and the opposition has rarely been constructive or effective. That single party today is BJP, having replaced Congress’s long rule. India’s two national parties reflect partially the dichotomy between liberals and conservatives. More importantly, many Indians feel left out. Some of them are deeply religious who seek continuity with tradition but they do not want a ‘Hindu Rashtra’; they prefer ‘Indian’ nationalism over ‘Hindu’ nationalism. Others are suspicious of utopias like socialism. Can conservatism give them a home?

Soon after Independence, Congress made a radical departure from traditional economic arrangements by adopting a socialist, statist agenda. Opposition to it came from the conservative Swatantra Party, which defended economic freedom against Congress’s Licence Raj. Although in 1991 Congress jettisoned socialism, it has remained a reluctant reformer. Liberals within the Congress have invariably prevailed over conservatives. Even if the dynasty were to abdicate today, it is unlikely that the party would shed its left of centre, pro-poor, liberal, secular credentials. Those who want to transform it into a modern day Swatantra Party are chasing wild dreams.

BJP can lay a stronger claim to conservatism based on its religious nationalism. Republicans in America, Tories in England and Christian Democrats in Germany also provide a home for religious and nationalist conservatives. In 2014, the mesmerising aspirational rhetoric of Narendra Modi persuaded many middle of the road Indians to vote for a reinvigorated BJP. The Chaiwalla’s victory was compared in social terms to the British conservative Disraeli’s Tory democracy. Although the new supporters of Modi were religious, they did not care for Hindutva and hoped his economic agenda would prevail.

One of them was Jaithirth Rao whose forthcoming book, The Indian Conservative, draws inspiration from a long line of conservative Indian thinking from Ram Mohan Roy (and even the Mahabharata) through Bankim Chatterjee, Vivekananda, Lajpat Rai, Rajagopalachari, BR Shenoy, and others. Like a good conservative, Rao values continuity and regards the modern Indian state as successor to the British Raj.

He appreciates the British for unifying India and leaving a legacy of Enlightenment values, enshrined in our Constitution. He offers a provocative counterfactual: what if the governors of Bombay and Madras had been independent and had reported directly to London (as Ceylon’s governor did), independent India might have been a much shrunken nation. Rao believes that the tragic Partition of India might have been avoided if Baldwin had prevailed over Churchill and India given dominion status in the 1930s.

In the 19th century ferment, Ram Mohan Roy wanted Indians to tap into their rich intellectual traditions, modernise and reform them. In response Bankim, the Arya Samaj, and others preferred to revive them instead. This opposition continues today. Ramachandra Guha asked a few years ago, ‘where are India’s conservative intellectuals?’ His premise, like Jaithirth Rao’s, is that conservative intellectuals could help BJP modernise its ideology; shed its divisive, majoritarian mindset; and broaden its appeal to today’s young, aspiring Indians.

Someone like Edmund Burke (father of modern conservatism) might even help bring closure to the wounds of Partition that have been reopened by the change in Kashmir’s status. Liberals, from Nehru onwards, have tried but failed to bring about a non-resentful assimilation of Kashmiris into India. Might a conservative today, someone like Rajagopalachari (the only self-styled Indian conservative) succeed? Burke, after all, did bring closure to the restless English mind over the violent French Revolution that was as startling and tragic as our bloody Partition. His message was a conservative credo: stop chasing utopias and worry about common decencies.

We do not hear voices of moderate Hindus or Muslims in contemporary Indian public life. They are drowned by the shrill sounds of Hindu nationalists and left secularists. Both have failed us. Once upon a time public figures like Gandhi, Maulana Azad, and Vivekananda spoke with credibility to the silent majority of religiously minded Indians. We could do with such persons today who will dare to ask, why do we need Hindu nationalism in a nation where 80% are Hindus?

The problem with left secularists, on the other hand, is that they were once socialists and only see the dark side of religion – intolerance, murderous wars and nationalism; they forget that religion has given meaning to humanity since civilisation’s dawn. Because secularists and Hindu nationalists speak a language alien to the aam admi, they are only able to condemn communal violence but not stop it as Gandhi could in East Bengal in 1947.

We should have no illusions today about the rise of a contemporary, conservative party like the Swatantra. Our best hope is the spread of conservative ideals within the two national parties. It could result in a softer, more inclusive BJP and a more market friendly Congress. A conservative temper would help make Indians more comfortable with the free market and governments would not have to reform by stealth. It would further communal harmony, not by weaning people away from religion but encouraging moderate religious leaders to speak up for a decent, inclusive polity. The conservative ideal of modernising tradition is certainly worth embracing in a deeply traditional society like India.

Is Milton Friedman dead? Not quite. Individual social responsibility, not corporate social responsibility, must be the mantra 4 Sep 2019 10:58 PM (5 years ago)

 The Times of India | September 2019

Capitalism has been on the defensive ever since the global financial crisis of 2007-08. Young people in the West have been turning away from the market system because of widening inequality, revulsion against high CEO salaries, and deepening distrust of business. By 2016, half of America between 18 and 29 years of age rejected capitalism in a Harvard study (with one-third supporting socialism.) Two years later, a Gallup poll in 2018 confirmed these findings when only 45% in the same age group expressed a positive opinion of capitalism. The election of President Donald Trump and the Brexit vote echoed this trend.

The fear that capitalism might be failing forced 180 CEOs of the largest corporations in America to unveil last month a new statement of purpose. It replaces the present doctrine of profit and shareholder primacy, which was famously articulated by Nobel prize winning economist Milton Friedman in 1970: “There is one and only one social responsibility of business – to use its resources to engage in activities designed to increase its profits so long as it … engages in open and free competition without deception or fraud.” Friedman’s comment was so influential that it was written into law. The new statement of purpose wants a company to balance the interests of shareholders with those of customers, employees, suppliers, communities, the environment and be accountable for its social impact.

Of course, a corporation should promote the interests of all stakeholders, but how do you then make it accountable with so many goals? Every institution in society needs accountability. Democracy, for example, is superior to other systems because rulers are accountable to citizens, who can vote them out periodically. Similarly, profit informs a company if it is healthy and efficiently employing its resources. It is accountable to shareholders for its profits through a board of directors, who can fire the CEO. The problem is how to measure performance with multiple fuzzy goals and then who is it accountable to?

The second problem is that the statement may be hollow. A company’s profits already reflect the interests of all its stakeholders. A company is only successful if it “creates value for its customers”; it would not exist if people did not prefer its products to its competitors. Second, a company’s results depend on its ability to hire and retain the best employees. A young MBA today wants to work for a company that not only pays well and develops her skills, but shares her values, for example, in caring for the environment. Third, a good company knows if it squeezes its supplier too hard on price, it will receive a sub-standard component, which will damage its own product. So, “dealing fairly with suppliers” is also an empty flourish. Finally, in “supporting the community and protecting the environment” a company builds a reputation, which translates into higher sales, motivated employees and improved profits.

Is the statement of purpose then merely a self-serving exercise by CEOs, a publicity stunt as its critics say, or will companies now become proactive on the environment; engage in less tax avoidance; place greater focus on long-term health of society? Will companies stop selling soft drinks and candy that promote obesity, and painkillers that have led to the opoid crisis? Does corporate responsibility mean the lose-lose policy of stopping US companies offshoring jobs to India? Dharma is subtle, says Bhishma in the Mahabharata.

The new goals of the American corporation will have consequences in India. Although two decades have passed since the reforms of 1991, capitalism is still trying to find a comfortable home. Indians still believe that the market mostly helps the rich. They do not distinguish between being pro-market and pro-business. Being pro-market is to believe in competition, which helps keep prices low, raises the quality of products, and serves everyone. Being pro-business is to allow politicians to distort the market through excessive intervention, resulting in ‘crony capitalism’. The result of this confusion is the timidity of reform, excessive number of dysfunctional public sector companies, and a nation that is not performing to potential.

The ambivalence towards profit, i fear, will also make young Indian managers in the private sector not value the work they do. They will forget how their products improve peoples’ lives; how companies create millions of jobs; how taxes on corporate profits allow the government to run schools and hospitals. This may lead to low self-esteem and low motivation at work. A poor investor already feels cheated by the CSR law which ‘steals’ 2% of her profits for non-profit making activity. This is certainly not a formula for creating competitive Indian companies to win in the global economy. It is not how to transform India from a poor into a middle-class country.

It is good to search your soul. All of us want to be noble and do some good in the world. This is why Bill Gates is a hero. Everyone applauded Gates when he declared at Davos in 2008 that capitalism should have a twin mission: “Making profits and improving lives of those who don’t fully benefit from market forces.” But people took the wrong message. Gates expressed two different ideas. He did not mean that Microsoft ought to improve the lives of the poor. He meant that those who receive dividends from Microsoft’s after-tax profits ought to engage in philanthropy and help the poor. In other words, philanthropy is an individual social responsibility (ISR), not corporate social responsibility (CSR). Friedman was also right: a company should focus on profit; while making a profit, it serves the interests of all its stakeholders and does enormous good for society. Philanthropy is a wonderful thing but it is an individual’s responsibility. Hence, ISR not CSR should be our mantra.

Contra Hindutva, Kashmiriyat: How consent works in a world of invented nations and fictional nationalisms 27 Aug 2019 10:54 PM (5 years ago)

 The Times of India | August 2019

The recent change in the political status of Kashmir has deeply wounded the Kashmiris. There is anger, fear, alienation and loss of self-respect. Many have addressed the hurt to Kashmiriyat from a legal or historical perspective. But what is needed is a deeper appreciation of the fact that national and regional identities are imagined creations. Both Hindutva and Kashmiriyat are invented. The only real ‘consent of the people’ is the desire of a person to live in a country. This means that India must become a desirable place to live, not only for Kashmiris, but for all Indians.

India is a union of many identities and some have asked if the injury to Kashmiri identity is different from the pain, say, of the proud people of Andhra who lost half their state a few years ago? Others have argued that Kashmir is a border state with a history that makes it unique. But there are other border provinces, such as Punjab, where people lost their homes and lives during Partition. Their pain was even more poignant and heart-breaking. Later, Punjab was further divided into Haryana and Himachal. Were the people of Punjab or Andhra asked about these changes?

Some liberals believe that a plebiscite is the only real form of consent and Kashmiris should be given a choice to secede on the principle of self-determination. If this is true, are we not morally bound to have a referendum in Andhra Pradesh? Thinking back to 1947, should we not have applied this principle to the citizens of 565 princely states who occupied 40% of India’s territory when the British left? Kashmir was only one of these. BR Ambedkar felt that India was a nation of 3,000 jatis. Should there have been 3,000 referendums? Moreover, shouldn’t Indians under the Raj have also been given a choice – to be ruled by the British or by Indians? If enough Indians had wanted the British to stay on, there might never have been a free India. A referendum can become a path to befuddlement as Britain has discovered after Brexit.

The idea of a nation-state based on common descent, language, and shared culture is a recent invention. Although born in the Treaty of Westphalia (1648), the idea did not spread until the 19th century. At the fall of Napoleon in 1815, Europe still consisted mostly of empires and kingdoms. After that, Europeans deliberately went about crafting nation-states. Since natural unity was usually absent, their leaders ‘manufactured’ it and sold it to the people through mythologised versions of history in school textbooks. Hindu nationalists are trying to do the same today.

Repelled by the horror of World War I caused by ugly nationalisms, the world was drawn in the 1920s to the moral idea of national self-determination. Leaders of the freedom movement in India also realised that their claim to self-rule would depend on proving that their country was a nation. It was important because many colonial rulers of the British Raj believed that India was merely a ‘geographic expression’ (in the words of Winston Churchill). Mahatma Gandhi, thus, became our chief mythmaker.

Today, Kashmir’s integration into India invites the same question: What is a nation-state? Inventors of the idea would say, it is a sentiment, a fellow feeling that unites Indians, giving a sense of oneness. The problem is that this positive feeling often turns negative – an antipathy towards those who are different. Kashmiri Muslims might protest they don’t have a fellow feeling for Hindus, and this was the argument for creating Pakistan. The answer is that most nations contain many religions; even Muslims live as a minority in many countries. Religion is thus not a sound basis for nationhood. This logic can also be extended to race and language in a multicultural world.

Another source of fellow feeling might be the possession of common memories of celebrations and sufferings. The problem with historic memories is that they can also divide. Memories of invasions, of temples destroyed are a source of anguish for one person and heroism for another. Mahmud of Ghazni, who sacked Somnath, is a villain in Hindu eyes and hero among Muslims. So, this criterion also fails and forgetting history is often better for nation building.

Since all criteria of identity fail for a nation-state, we must face the inconvenient truth that a nation is an ‘imagined community’ as Benedict Anderson has taught us. Identity has nothing to do with it. All modern states and regional identities are artificial constructs where most citizens are strangers who will never meet. There is no natural glue that unites the people of India or of any nation, or of Kashmir, Bengal or Andhra. Hindu nationalists and Kashmiri separatists need to understand this. Both Hindutva and Kashmiriyat are fictions. India was invented on January 26, 1950, on the premise that everyone who resides in its territory will have maximum equal freedom and there will be no second class citizens.

After the dust settles, the unhappy manner of integrating Kashmir into the Indian Union will matter less. A successful, non-resentful assimilation of Kashmiris will eventually depend on how desirable India is in the eyes of the ordinary Kashmiri. The job of the Indian state is crucial to this end: to create predictability through good governance, ensure everyone is equal before the law, give people choice to change their rulers, provide opportunity for education and health, and craft conditions for prosperity. This is the main reason why anyone will choose to live in India. It is the only real ‘consent’ in a world where nations are invented and nationalism is fictional.

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