Saturday, June 22, 2002

Times of India 2002 Columns (More)

PLAYING TO WIN 13/01/2002

The stubborn persistence of our software exports is a source of some embarrassment to our armchair intellectuals who have been regularly predicting their crash. Instead, they have kept growing by an amazing 50 per cent a year for more than a decade, and even in this worst year in the industry’s history they will grow 30 per cent. Any other industry would die for this sort of constancy, and so would our cricket team. Critics of the industry contemptuously described its work as “body shopping” and surely how could such lowly activity last? Then, it was the Y2K bug that was keeping it afloat; well, the bug went away, but our software industry refused to slow down. Next, they said, the American recession will surely stop it; the recession has hurt, but not to the extent that everyone predicted. Finally, September 11 would be its death knell, but the industry seems to have quickly recovered from this crisis as well. What accounts for its resilience, I think, is that India has emerged as the only serious candidate for outsourcing software. Philippines is not an option. Ireland has out priced itself. Israel competes in a different segment. China is at least three to five years away. The only thing that could stop India is a war with Pakistan, which would raise the risk of outsourcing to unacceptable levels in our customer’s eyes. The major American companies have doubled their outsourcing budgets, reports the latest Forrester survey. Another report says, “185 of the Fortune 500 companies are now doing offshore work with Indian companies.” Giga expects offshore outsourcing to grow 23 per cent in 2002. All the major software suppliers in the U.S. (including Accenture and EDS) have recently announced that they are coming to India, which raises the prospect of fairly vigorous acquisition activity. All this, however, does not convey the pain suffered by the industry in the past year. The best companies have seen their benches grow, prices and margins diminish, engineers laid off, empty buildings, expansions delayed and hopes destroyed. But from the pain is emerging a stronger and more sophisticated industry. What are the lessons it has learned? First, larger, brand name companies will do better in tougher times; weaker, smaller ones will not survive. Second, it is paramount to stay close to the customer. Some CEOs of the software companies have physically relocated to the United States. Where they haven’t, they now spend much greater time there, supported by a strong white American head of sales. Both Wipro and Infosys have increased their physical presence in North America. The pay-off too has been immediate--they are getting their best ideas for new products and services from their customers. Third, while it is important to target new customers, the bigger rewards come from harvesting existing ones. Hence, “key account management” has become a powerful tool. Companies are placing teams of engineers at the customers’ disposal to show them newer ways to save costs, improve returns from existing investments, introduce newer applications. Fourth, vigorous interaction with customers allows a company to demonstrate “domain expertise”. Infosys has hired a medical doctor to enhance its credibility with its health care customer. An airline customer feels more comfortable talking to a former airline employee, who now works for NIIT software. The customer feels that my software supplier understands my needs, and this removes some of the pressure from the sensitive subject of pricing. It leads to longer-term contracts and dedicated offshore centres. Domain knowledge, if captured and retained is wonderfully aggregative--what you learn from one customer adds value to the next. Fifth is the power of alliances. For example, Mastek, a software company in Bombay, has formed a 50:50 joint venture with Deloitte Consulting, which has close to $ 2 billion in worldwide revenues. A Deloitte executive runs this joint venture, and Deloitte’s customers derive comfort from outsourcing their work to someone they trust. Thus, our companies are becoming sophisticated. They are rising in the value chain by offering enterprise resource planning, applications maintenance, and Internet services. They have broken into retail and distribution, professional services, communications and utilities. They have come a long way from the “coolie days” of Y2K. Those companies who sneered at Y2K work now realise that they lost an opportunity because it opened the door to many large customers. It seems to me that the export of software and IT services are to India today what textile exports were to Britain in the early 19th century. If you were a Londoner in the 1820’s you would have seen lots of textiles going off to India, but you wouldn’t have seen an industrial revolution. Similarly, I think we can see these technology exports, but we cannot see a services revolution that is transforming India.


A few years ago the respected head of a multinational company observed the unreal quality of our public discourse. He said that he had read our newspapers voraciously for two weeks and for every report on China he had counted eight on Pakistan. “To the world at large only China and India matter in Asia,” he said. “When people say that the 21st century will belong to Asia, they have China in mind, and then India. Japan doesn’t count, because its demographics are wrong. Pakistan doesn’t even exist in the big picture. Although China is currently ahead, India is the only country that could counter-balance it. I realise Pakistan is your neighbour, but so is China.” Listening to him I was reminded of one of Patanjali’s yoga aphorisms: “What a man thinks, so he becomes.” Patanjali was referring to controlling our thoughts during meditation, but what is true for an individual is also for a nation. We are obsessed with Pakistan and so we will become like Pakistan--a failed economic and political state. Instead, we should engage with China, the most dynamic economy in the world for two decades. Pakistan is a distraction and pulls us down. China will push us up. What can China teach us? The first lesson is to have clear national objectives. For twenty years China has had only one objective--to become an economic superpower and lift its people out of poverty--and it is pursuing it single-mindedly. Nations, like individuals, perform best when they are one-pointed. The Chinese have learned that law and order, speedy justice, political stability--all good in themselves--also promote growth by creating a sound climate for investment. Chinese leaders wake up in the morning and they think only one thought--the prosperity of their people. What do our leaders think about? The New York Times just reported that there were five Chinese delegations in Bangalore in the last month alone, trying to understand India’s success in software. “They have beaten us in everything, now they also want to defeat us in software,” said the CEO of an Indian company who refused the Chinese entry into his premises. Premier Zhu Rongji visited Bangalore this month to woo Indian companies to come to China; he went to Delhi not to talk about Aksai Chin or Pakistan but to establish a Beijing-India airlink. “Foreign investment has been the fuel behind the Chinese miracle”, reported the Wall Street Journal. “Every dollar of foreign investment yields five dollars of additional output to the Chinese economy. That compares with less than two dollars in the state owned sector.” More than fifty per cent of China’s phenomenal exports come from foreign enterprises. Even assuming that 70 per cent of Chinese FDI is from non-resident Chinese, the 30 per cent that is not is four times larger than ours. Yet Indians are the ones who fear foreign investment. Our concerns over swadeshi reflect our inferiority complex and our lack of confidence in our ability to compete in the global marketplace. How did the notoriously insular Chinese manage to change their attitude to foreign capital? This is a second lesson China can teach us: how to get more foreign investment. Why China is growing so fast is the result of a phenomenal rise in labour productivity, according to a study by Zulin Hu and Mohsin Khan of the IMF. They trace this not only to foreign enterprises, but also to Chinese town and village enterprises, “which have drawn more than 100 million people from low productivity agriculture into higher value added manufacturing.” Started initially as simple agricultural processing factories, many are now world-class exporters. China’s reforms started from below unlike ours, and the third lesson we can learn is to shift the focus of our reforms onto agriculture and the village. Another secret of Chinese productivity is flexible labour laws. The Chinese are able to hire and fire workers based on customer demand. Chinese workers in state enterprises are routinely punished for indiscipline. This is not possible in India. Even when a company is sick and has stopped production, India’s public sector workers earn full salary. Hence, a fourth lesson is to reform our labour laws. There are many more lessons. But first, let’s first learn to ignore Pakistan and heed China. Every Indian leader should scrawl “China” in big letters in his office to remind him everyday who is our real competitor. While China is currently ahead--it also has a twelve-year head start in economic reforms--our economy has performed well in the past two decades, and if we accelerate our reforms, especially in agriculture and education, we will gain ground. If we don’t, then China is going to push us around and humiliate us in the 21st century.


Nothing in our country diminishes us more than our power situation. It reminds us everyday that we are a Third World country. We have lost ten years since we began electricity reforms, and had we made the same progress as we have in telecom, we would have been able to say proudly what a Chinese woman said to me in Shanghai recently, “I feel I am living in a different country.” Our biggest mistake has been to forget the central idea behind our economic reforms-create competition in the market, and this will bring consumer choice, lower prices, better quality and improved service. To create a competitive power market we have to allow anyone to produce electricity and sell it in the market. If we did this there would be plenty of good quality electricity for everyone, prices would come down, and service would improve. In our enthusiasm over the Orissa model, we began to break up our State Electricity Boards, privatise distribution, but we forgot that there must be more than one player in each distribution circle. For creating competition we don’t need to lay new lines, because each producer of power ought to have open access to the central grid and connect its power to the lines that are already laid. And any distributor, supplier or bulk consumer of power ought to have open access to this power, and by paying a charge for the use of the network it should bring power to our doorstep. This is what we are beginning to do in telecom. We must separate in our minds carriage (the wires or lines) and content (the electricity that runs on the lines). Two momentous events are happening over the next few weeks, and they can still set the country on the right path. One, the Electricity Bill 2001 is before a select committee of Parliament and is currently being debated. Two, Delhi is about to privatise power distribution. The Electricity Bill accepts the idea of open access in distribution, but it does not specify when. The original draft bill specified that it would happen in 3 years but the monopolists in the ministry deleted this date. Our well-intentioned power minister, Suresh Prabhu is trying hard to solve the power crisis. He is bright and energetic, but he has unfortunately been captured by the vested interests in the ministry and the SEBs, who want to preserve their monopolies. Otherwise, why should they suppress part of report of the Expert Group that included Montek Singh Ahluwalia, Deepak Parekh, Rakesh Mohan, Jairam Ramesh, K.V. Kamath, and Harish Salve? The Group studied data from around the world and concluded that our power prices would only come down if we allowed more than one company to sell power to the final consumer. It also cited the example of Bombay, where competition between BSES and TEC had lowered power prices. Mr Prabhu should look at international experience (e.g. U.K., Australia and New Zealand) where residents have multiple providers of power, and this competition has resulted in lower prices and better service to their consumers. The European Union has been so impressed with U.K.’s Electricity Act of 1989, which has brought down electricity prices by 30 percent over the last decade, that many European countries are restructuring along similar lines. Mr Prabhu should also learn from the telecom sector, where vested interests in the Department of Telecom (DoT) had tried to stop competition, until the Prime Minister in frustration had to take away the telecom reforms from the telecom department. Until he passed the authority to the Jaswant Singh committee, nothing happened because the Department of Telecom blocked every reform. Mr Prabhu will have to begin to value competition or Mr Vajpayee will have to change the minister, as he did in the case of Telecom. Delhi’s impending privatisation has two tragic flaws. First, Delhi has been divided into three circles and we are about to invite bids for one company per distribution circle. Thus, we will replace a public monopoly by a private one. Although the massive theft of power may diminish, prices will not because 16 percent cost-plus return is guaranteed to each monopoly. Hence, Delhi’s Electricity Regulatory Commission must insist on at least two competing players. The private companies will protest because no businessperson likes competition, but we don’t want another Enron on our hands. Delhi’s second fatal mistake is to give monopoly status to the state transmission company, which will become the sole buyer and seller of bulk power. We should undo this quickly to allow any distributor to buy power from anyone. Similarly, bulk consumers should have the right to buy directly from competing producers or suppliers. Only thus will the public interest be served.


Like many Indians I was stupefied to read that the railways plan to bottle water. In that case, I thought, why don’t they also grow tea (and wheat and rice) for their catering department? And cotton for their conductor’s uniforms, and make shoes for the drivers while they are at it? Perhaps then we can get someone to run the trains safely. The issue is not bottled water but the astounding mindset of the railway board that is ignorant of the basic managerial concept of “core competence” and thinks that the railways with its inefficient, high cost labour can do it cheaper. The purpose of the Indian Railways is not to serve India’s citizens but to tend to the comforts of its 15 lakh railway employees. This is seven times more manpower per kilometre than in the developed countries. The railways admit that five lakhs employees are surplus-that is, one out of three persons should not be there. Railway families occupy on the average train 40 out of 100 berths in the two-tier (AC) sleeper class, and they (and their relatives and friends and friends of friends) get priority in bookings because of “connections”, and this explains why you and I cannot get a berth. Staff accounts for 50 per cent of total railway costs with productivity that is amongst the lowest in the world. Because of rising payroll costs, expenses on repairs and maintenance have been steadily declining, while employee negligence (called “human error”) is the main cause of accidents. When a serious accident occurs, the site managers are typically found tending to the visiting ministers and board members, while accident victims are left to fend for themselves. When the Rajdhani derailed on the Tundla-Kanpur section in January 1992 the chief area manager of Kanpur was transferred because he was aiding the injured passengers and not looking after the chairman of the Railway Board. There was a time when railway journeys were filled with pleasure. Now, filth on the tracks at the premier New Delhi station puts off every decent citizen, and the first 20 km of the journey are a sanitation disgrace. It is easy to blame the filthy habits of our people, but couldn’t some of the five-lakh surplus employees be deployed to clean it up? When questioned the railway authorities frankly admit that the low caste safaiwallas mark attendance and for the rest of the day pursue their real profession, which is to play in marriage bands. These examples are symptoms of a bigger disease that has infected the railways management and it is destroying a great institution that will soon be 150 years old. The railwaymen blame the politicians, and to some extent they are right. Among its chief destroyers have been three ministers in the past twenty years whose names are well known. But we now have a good minister, Nitish Kumar, whose budget has finally reversed a pernicious ten-year trend (wherein freight subsidised passengers), but does he have the will to do the surgery? It is easy to blame politicians, but the real problem is in the managerial culture and systems of the railways. It begins with a Railway Board that centralises decisions, which should be taken at the operating level. Board members are mediocrities who have come up through a perverse seniority system. When they reach the board level they have only a few months left; they see it as a reward, enjoy a few foreign trips, and retire happily without upsetting the status quo. The downslide began in the late eighties when the chairman reduced the tenure of the fulcrum of system-the Divisional Railway Manager (DRM) to two years in the interest of “giving everyone a chance.” The railways have ten officer cadres and officers place loyalty to their cadre above the good of the system. Only when officers have sufficient tenure as division and general managers are they able to shed their departmental bias. Thus, the DRM is the grooming ground for preparing future leaders, and this single bad decision cut this short and reinforced the disease of “departmentalism”. Yet, the situation is not hopeless for the railways can be turned around. This happened between 1980 and 1982, when a good CEO, M.S. Gujral, came in and stemmed the rot. The railways had declined so badly in the 1970s that power plants used to shut down because railways failed to deliver them coal. He transformed the institution so dramatically that India enjoyed the fruits of his labours through the eighties. Fortunately, we now have an excellent blueprint for reviving this great institution in Rakesh Mohan Committee’s report. It raises many issues, and in my next column I shall write about how to reinvent the railways and create a vibrant, outward looking, commercial institution with a customer focus.

WAKE UP CALL 24/03/2002

Every Indian seems to have one impossibly romantic railway memory, and mine is of a journey from Kalka to Simla as a five year old when I feasted for the first time on the snow tipped crests of the Himalayas, and I later recounted it in “A Fine Family”. But these memories are rapidly dying, as are the railways. Today, the Indian Railways are in financial crisis, and if something drastic is not done, they will wither away like the state in Bihar. The railways are the Indian government in miniature--inefficient, corrupt, hopelessly over-manned, utterly politicised, with shoddy, callous service. They weave the nation together, as they carry 4.5 billion passengers (or 4.5 Indias) a year. They have made the poorest Indian mobile--for fifty rupees one can travel 200 kilometres. They are cheaper than anywhere in the world because extortionate freight prices subsidise passenger fares. Hence, nobody dreams of transporting goods by rail, not only because of high tariffs but also constant delays. Even coal, petrol and diesel are inefficiently transported by road. To become a modern, efficient institution the railways have to shed urgently 500,000 overpaid and under worked employees, who demoralise the ones who do work. There are three ways to do this: one, don’t replace the people who retire; but this will take ten years and by then the railways will be dead. Second, retire two out of four persons compulsorily at age 55, retaining only the outstanding ones; this too is slow, but it will help create a climate of excellence. The third way is to offer surplus employees the generous voluntary retirement scheme just announced by the government, but implement it like the best companies--get rid of the deadwood and retain the good people. To succeed they will have to employ all the three ways. To cut their losses the railways will have to also shed non-railway activities. They have to stop manufacturing, running hotels, hospitals, schools, printing presses, cargo terminals, parcel offices, and a host of activities that are best performed by experts. The factories making locos and coaches should be spun off as joint ventures to technology suppliers so as to bring in capital and the latest technology. The French Railways (SNCF) did this successfully. Not only will out-sourcing save money, it will improve their train services. Managers around the world have learned that a good organisation focuses only on its core activity and does it brilliantly. In order to survive the railways have to lower bulk freight rates and regain market share lost to trucks. It is scandalous that it costs more to send goods from Delhi to Mumbai than from Mumbai to London. Because of uncompetitive freight rates thousands of trucks bring coal from Bihar to Punjab. Indian steel makers have become price competitive internationally, but they cannot compete domestically because of high freight charges to their customers. Freight costs can no longer absorb the cost of excess labour, and if labour is rationalised, studies show that freight rates could be halved and the railways would still make a profit on freight. But to regain freight primacy they will need new container terminals with new operators, to raise the speed of freight trains, improve communications and signalling, and link its processes through information technology. Most importantly, they have to change their monopolistic ‘take it or leave it’ attitude to the customer. The threat of early retirement will help here. Finally, the most important way to save the railways is to distance them from the government. Politicians have played havoc on them. The Rakesh Mohan Committee studied practices around the world and discovered that the best railways have achieved autonomy from their governments by becoming independent companies, governed by an autonomous regulator, who sets tariffs in a transparent manner and who might have more guts than politicians to raise second class fares. But the railway board opposes corporatisation because it will bring their accounts into the public and enforce accountability. It might not reduce government interference either and they could end up as another fourth rate public sector undertaking--and they are at least third rate today! But corporatisation does offer the hope of bringing in an outstanding CEO, rather than the mediocrities of today’s seniority system. Moreover, you can build safeguards to guarantee commercial autonomy into the contract between the government and the railways at the time of corporatising. This may not be enough, but if the status quo remains then a once great institution will just wither away, and just at the moment when our vibrant, growing economy needs it the most. Railways have to be saved from their own leadership. Hence, the radical and urgent reform of this institution should not be entrusted to the railways, as we have learned from telecom reform.

HOME, SWEET HOME 20/04/2002

When I was young, owning a home was a hopeless dream. Either the company or the government provided shelter to the salaried middle class, and at retirement one scrambled to find a place of one’s own and a lower standard of living. But today, this is all changed. Even a young person starting a career can put down a deposit of ten per cent of the cost of a house and can easily raise a fifteen-year mortgage loan, and this explains why the housing finance business has been growing 30 per cent a year for the past four years, and why there is a boom in middle class housing in Gurgaon, Thane, Powai, and many cities of India. This is good news for everyone. A construction boom can become the engine of growth for the entire economy, and especially depressed sectors like steel and cement. Every rupee invested in housing adds 78 paise to the nation’s wealth or GDP. House building is also a great generator of employment--a million new houses create 5 million new jobs directly and 7.5 million jobs indirectly. Moreover, owning a home brings social stability, as homeowners tend to be more law abiding and caring of the community. It is not often that one can link growth to reforms, but one can in this case. The housing boom is the direct result of a dramatic fall in interest rates in recent years, from 17.5 to 11.5 per cent, combined with rising tax deductions on home loans. The repeal of urban land ceilings in many states is increasing making land available for building, and soon housing loans companies will be able to repossess houses from those guilty of not paying back their loans. All these factors are encouraging banks to give more loans and owning a house is more affordable. Having said all that, this has been a small revolution, and the dream of owning a home is still distant for most. Of the thirty million middle class families only half a million take home loans each year, which is about the same number of cars that are cars sold in India every year. For an economy that has been growing between 5 to 7 per cent a year for two decades, we ought to have experienced a series of construction booms, just as Shanghai, Bankok, Kuala Lumpur and any number of cities did in the Far East. Like Singapore, these now look like first world cities, and by contrast our Mumbai and Kolkota look like slums. Why is that? The reason is the same sordid tale of bad, unreformed laws, corrupt and lazy bureaucrats, suspicion of the private sector, and “a government that is far too big for the little things and far too small for the big things”. First of all, unclear titles keep land away from the market--by one estimate fifty per cent of the India’s land does not have a clear title. If Thailand could fix this problem, and Andhra Pradesh is also doing it, why can’t the other states? Second, municipalities in India require roughly fifty separate permissions in order to develop land, and this takes 3-5 years, which is enough to break the back of any honest builder. Third, Rent Control is a powerful disincentive for new building; it penalises the young, and makes our cities look like slums. Again, the answer is simple: enact Delhi’s Model Rent Control Law everywhere--it protects the interests of both tenants and owners in a sensible way. Although enacted by Parliament in 1995, traders in Delhi have prevented its implementation. Fourth, stamp duties in India are high--they average 10 percent compared to around 2 per cent in the rest of the world, and this adds to housing cost and restricts demand. On the other hand, property taxes in India are too low--0.002 per cent compared to 1.5 percent in the world--and this means little incentive for municipalities to develop urban infrastructure. Fifth, half the states have still not repealed the vicious Urban Land Ceiling Act, which has kept land away from the market and meant artificially high home prices. These land market barriers mean that India’s land costs as a proportion of GDP per capita are the highest in the world, and housing construction has stagnated at only 1 per cent of GDP, compared to 6 percent in Brazil, 5 per cent in Korea, and 4 per cent in the U.S. The same goes for housing’s share of employment, which is only 1 per cent in India compared to 4 per cent elsewhere. The answers are, thus, blindingly clear. And they are contained in the government’s wonderful 1988 National Housing and Habitat Policy. All we now need is for the government to act on it!


Like any great tragedy, the communal violence in Gujarat is full of other sadnesses. One of these is that we have begun to lose faith in our ideals. We had already lost faith in socialism, but now we have begun to question the efficacy of secularism as well. Part of the reason is that it has been unable to prevent or stop this murderous carnage. A major failure of contemporary Indian public life is that we do not hear voices of moderate Hindus or Muslims. We only hear the shrill voices of extremists at both ends. It was not always so. Earlier, we had sensible public figures who were also steeped in religion. Mahatma Gandhi, Maulana Azad, Vivekananda used to speak with credibility on behalf of the vast majority of religiously minded Indians. Today, there is an unfortunate polarisation between an influential and articulate minority of secularists and the vast majority of silent, religiously minded Indians. Neither takes the trouble to understand the other, and what we have as a result is a dialogue of the deaf. The problem with many secularists is that they are or were once socialists. Not only do they not believe in God, but they actually hate God. They 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 speak a language alien to the vast majority of Indians, they are only able to condemn communal violence but not stop it, as Gandhi could in East Bengal in 1947. Gandhi trudged through the Bengali countryside like a one-man peacekeeping force and kept Bengal quiet during the partition. Unfortunately, there were not Gandhi’s--had there been a second one, then Punjab might have also escaped much of the partition tragedy. Our secularists have been influenced by a number of 19th century European thinkers, starting with Nietzsche, who declared famously that God is dead. Ludwig Feuerbach argued that God was a projection of the human imagination and thus an illusion. Marx said this illusion originated in the alienation of the capitalist worker to whom religion was like opium, a drug that soothed his pain. Once capitalism was destroyed the drug would not be needed. Marx understood religion’s power and he saw it as socialism’s main competitor. "Criticism of religion," he said, "is the prelude to all criticism," as he attempted man’s most ambitious attempt to supplant religion with a doctrine about how life ought to be lived. But Emile Durkheim, a Frenchman, regarded religion a projection of society; its shared rituals and sentiments bound people together, and thus it wouldn’t easily go away. Sigmund Freud, the founder of psychoanalysis, wrote in the "The Future of an Illusion" that religion, despite its many negative qualities, helped make civilisation possible. Without it life in society would be impossible unless everyone could be educated to behave morally. The media has rightly focused on Modi’s failures of governance in Gujarat. His hands are covered in blood, and he should be sacked. But once he is gone, what happens next? Whom will we blame for the next communal riot? Communalism is surely more than governance issue. We need to ask once again, why did a million people die in the 1947 riots? Why couldn’t we prevent that tragedy? Fifty-five years have gone by and we still do not have an answer to that question. And, as a nation, until we do, we shall not be able to sleep in peace. That answer too will not come from analysis, I expect, but from literature. But while we wait for our "War and Peace" to emerge, we have begun to realise that communal harmony in India will not come from converting India into an image of a secular non-religious West by weaning people away from religion, as the secularists had hoped. It will come when moderate religious leaders come forth in public life and begin to lead ordinary decent he people in the direction of a secular polity, and snuff out the evil voices of fundamentalism. Until these moderate voices emerge triumphant, we have to live with the sad truth that we have all manner of extremists amidst us who feel a passionate ethno-nationalist claim to a vision of a homeland, and a willingness to condone violence, plus a story line that many Indians will buy, in part because it plays into existing prejudices. With that they have probably got a winning hand, whether or not the interests they advance are noble. Meanwhile, I take consolation from a European woman’s reaction to Gujarat, who says that in a country of a billion people, all of them with strong religious emotions, it is remarkable that there is so little violence. She finds that life on the Indian street is safer than almost anywhere.

PEACE, NOT WAR 02/06//2002

It is difficult to speak of the murder of innocent people, but it is also impossible to remain silent. First it was Gujarat, now it is Jammu. The nation’s mood has turned angry, and far too many sensible people are ready to go to war. In these troubled times, I sometimes think we are fortunate to have a hesitant poet for a prime minister. But our hawks accuse him of indecision and clamour for an American or Israeli style response. The Prussian master of strategy, Clausewitz, teaches that one must only start a war that one can win. Winning in this case would mean the end of cross border terrorism, and will a war with Pakistan achieve this objective? The answer is, no. A warlike Israeli response has not stopped Palestine suicide bombings, nor has a victorious war against the Taliban diminished America’s fear of terrorist attacks. Those who talk of a “limited engagement” in Kashmir also know in their hearts that wars can never remain limited once they begin. Thus, it is senseless to think of war in order to stop terror. Counter-terrorism, it seems to me, would be a more effective, lower cost, and lower risk alternative; recruit the jehadis from the ranks of the VHP and Bajrang Dal and we will kill two birds with one stone. The real question in Indian minds is whether we are doomed to live in perpetual conflict with our neighbour. Many believe that even if we were to give Kashmir away to Pakistan, permanent peace would not come to the subcontinent. Historians explain that the reasons lie in the origin of the two states. While saints and idealism created India, distrust and hatred created Pakistan. Hence, Pakistan defines itself in relation to India and is obsessed with it, while India is more relaxed and its neighbour is peripheral to its national psyche. Economists have other reasons to feel pessimistic. For a decade India has been growing at almost twice the rate as Pakistan--6.3 vs. 3.6 per cent; hence, India’s national income (in ppp) is now nine times bigger, although it has only seven times more people; and, its per capita income (ppp) is 22 per cent higher. India’s population growth rate is fifty per cent slower, while its literacy growth rate is fifty per cent higher. Pakistan’s capital formation is 66 per cent lower and it spends less on health and education than it did a decade ago. Unfortunately, it only excels India in its defence expenditure as a proportion of GDP. If these trends continue Pakistan’s economy will soon become one-tenth of India’s, and its military expenditure will become unsustainable. Then it will collapse, as the Soviet Union did because its economy could not match its military ambitions. But we cannot simply wait for Pakistan to collapse. As the stronger, and hopefully maturer nation we have to keeping trying to seek peace--even if it means a hundred failed Agra and Lahore summits. The alternative is much worse.


This government often reminds us that we ought to have more national pride, but I think that civic pride is more important, more durable, and a stronger foundation for nationhood. Indeed, a more civic-minded citizenry might have been able to contain the damage in joyless Gujarat, if not prevented the tragedy. Mahatma Gandhi, a Gujarati, often counselled Indians that they would not be worthy of independence until they became more caring and considerate neighbours. The word “civic” comes from “city” and is related to “civility”. A “citizen” originally lived in a city and a civilised person showed concern for fellow citizens; and in this kind act was born “civilisation”. In the early years of our republic we were rightly occupied with nation building, and our cities took second place. Also, people and votes were primarily in rural areas, and to show too much concern for the city was considered “elitist”. But as the middle class began to grow seriously in the eighties, our cities gained in importance, and with the passage of the 74th amendment in the nineties municipal government also became mandatory. However, the track record of our municipal governance remains poor, and the few examples of well-run cities--Surat, Thane, Mumbai and Bangalore--are the work of outstanding officials. If there is one word that attaches to Indian cities today it is filth. Many of us make the common mistake in thinking that poverty and dirt go together, but they do not. One can be poor and clean. The poorest Indian homes often have the cleanest kitchens. Japan was very poor after World War II but its cities were extremely clean. In fact, East Asia was always much cleaner than South Asia, and even in India, communities in the south were cleaner than the north, even when they were often poorer. I find that our dirt bothers Japanese investors, especially. Once, a Japanese businessman excused himself to go and vomit in the bathroom after visiting a government office. When he returned, he politely asked how Indian civil servants worked effectively in such surroundings. Gandhi used to worry constantly about our public hygiene. At a momentous annual session of the Indian National Congress--in the late 1920’s, I think--everyone expected Gandhi to deliver a rousing keynote address demanding swaraj; but he shocked the assembled gathering and began to speak gently about the hygienic way to defecate in public spaces consistent with public health; he then went on to admonish the honourable delegates from Bihar of caste prejudice and for not eating together. Why are our public spaces dirty? Is it a function of education or is it a cultural problem? Certainly in our private space, we tend to be relatively clean; we bathe daily; our homes are clean, and our kitchens positively shine. Our national stereotype is the Indian family that proudly cleans its home, and then throws the dirt outside its door. Some anthropologists have blamed this anti-social behaviour on the other-worldliness of Hindus and our excessive concern with our own moksha, unlike Buddhists and Christians who seem to show greater concern for others. While there may be some truth in this, I am sceptical of cultural explanations and in this case I’m certainly not persuaded of the link. Last year a reader of this column, Anand Bhardwaj, wrote enthusiastically from Mumbai to say that citizens of Santa Cruz West had succeeded in cleaning their neighbourhoods beyond the Milan subway. They had worked closely with the BMC, to remove open roadside garbage dumps, and had replaced them with closed bins inside each colony. This is a wonderful example of civic pride, and it is initiatives like these that will make our nation resurgent. Imagine, how our cities and villages might look if every Indian family were to become responsible for keeping clean only one metre of public space outside its boundary wall! Some neighbourhoods in Mexico City, in fact, practice this idea, and families vie with each other to beautify the strip outside their homes.

WHEN LESS IS MORE 16/06//2002

Soon after he became prime minister, Winston Churchill wrote to the First Lord of the Admiralty to ask, “Pray Sir, tell me on one side of one sheet of paper, how the Royal Navy is preparing for the war.” Churchill knew that if he did not qualify his request he would have received an unreadable 400-page report. Brevity is a great virtue, and nowhere more needed than in India. Our judges write judgements that are too long; our lawyers ramble on; our executives try to impress with lengthy memos; our politicians--well, try to get in a word. Our public affairs would improve tangibly if our power to be silent were equal to our power to speak. That less can be more is especially true in good writing. I discovered this at Procter and Gamble, a company as famous for its legendary one page memo as for its products. Its wondrous one page memo was created out of the same confidence in reason and technology that built America, and is as elegant as Panini’s grammar or Euclid’s geometry. Based on the reasonable assumption that all managers suffer from an overload of paperwork and files, it is simple, factual, and logical. The reader can scan it in minutes and grasp its contents. It has just enough data that a manager needs to make decision and no more. It is clear, precise, eschews hyperbole, and it actually improves the speed and quality of decisions, and hence it can be a source of competitive advantage. The one page memo consists of five short paragraphs, and its first sentence tells the reader what to expect--why should you be interested in what I have to say? Hence, the smart writer puts his best foot forward and states upfront the conclusion or recommendation. There is an inherent conflict between the reader and the writer’s interest--the writer wants to build a case slowly, leading to a conclusion, but the busy reader wants the conclusion quickly, and is only interested in the rationale later. Since this is not a detective story, a good first paragraph ought to focus on the “what” and not the “how”; but it must also, of course, offer one or two compelling reasons to believe in the conclusion. The second paragraph offers background--it is historical, factual, filled with data, and tells the reader why the problem or opportunity has arisen. The third para is the detailed recommendation--the “what” and the “how”, but don’t confuse the reader here with the “why”. The rationale should come in the next paragraph--“here are three reasons why you should accept my recommendation”--and typically one cites precedents, benefits (financial and otherwise) and risks. The fifth paragraph tells the reader that the author has looked at alternative courses of action, and why this is the best. Finally, the last paragraph addresses the next steps and lays out a plan of actions that will flow from the decision. The Maharashtra Administrative Reforms Commission is so impressed with this one page memo that it is recommending it to the government in order to make its bureaucrats more efficient. We Indians are verbose, and need to be reminded that human beings were born with two ears and two eyes, but with only one tongue, so that we should see and hear twice as much as we say. Shakespeare too, I think, must have had us Indians in mind when he wrote in Richard III: “Talkers are no good doers”. Hence, he offers us this advice in Henry V: “Men of a few words are the best of men.”

GARBAGE 30/06/2002

It is a relief that Indo-Pak tempers have cooled and we can once again get back to our lives. As we do, let us ponder over Isaiah Berlin’s words, “Men do not live by fighting evils. They live by positive goals.” Berlin was a great intellectual presence in the mid-20th century, and one of his positive goals that many Indians seem to be seeking today is a clean city. I realised this after reading the unusually large mail that my column on civic pride generated last month from communities across the country. Residents of Aashiana, a colony in Lucknow, proudly report that they are managing their own garbage collection, although it costs each family Rs 30 per month; they have also persuaded the Lucknow Development Authority to let them build a vermi-composting pit in the green belt. Govindpuri, a resettlement colony in Delhi, is well ahead of the posh colonies of south Delhi in its solid waste management program. Residents there now segregate garbage, and green rickshaws collect organic waste while red rickshaws the inorganic; their yuva manch performs street plays to educate the people about the new system. Even Patna, famous for its cowsheds and garbage mountains, has begun to change. Tired of waiting for the municipality, some middle class mohallas, with the support of voluntary organisations, have privatised street cleaning and garbage collection. The most impressive story of collective action is that of Civic Exnora in Tamilnadu. A resident of Vadapalani Road in Chennai tells this story: “Our street used to be one big garbage dump; the bin outside our home was always overflowing because the corporation van did not often show up. My neighbour in frustration would set the garbage on fire, but the smoke irritated my asthma and I would douse it with water. So, we fought all the time. “One morning the dustbin disappeared and a brightly painted cart stood at my door with a boy in uniform and gloves. Called the ‘street beautifier’, he taught us to separate our garbage at home. Each morning he empties the organic waste into the green section of his cart and the recyclable waste into the red section. When he has covered the street, he takes the cart to our Zero Waste Centre, where he empties the organic waste into a storage tank that has holes at the bottom and where it is converted to compost. He sells the recyclables and the compost to augment his income. I pay Rs 20 a month and our street is now spotlessly clean. Where there was garbage outside each home, we have now planted trees.” All this happened because residents of Vadlapani Road decided to form an Exnora Club. Started by M.B. Nirmal, a bank manager, this civic movement is so successful that it is rapidly spreading across the South. It now covers 40 per cent of Madras city, 75 per cent of its suburbs and has clubs across Tamilnadu and the three southern states. Its 17,000 street chapters provide clean, scientific garbage collection to approximately 17 lakh homes. Having realised their collective negotiating power, many clubs are solving other civic problems (sewage, street lighting, water supply) through their municipality. Exnora was recognised by the United Nations Conference on Human Settlements in 1996 among the 100 Best Urban Practices. If you too want to transform your community, write to: Exnora, 20 Giriappa Road, Chennai-17, ( or call 044-8153377. There are two ways to look at these examples of civic virtue. One is to deplore the failure of the state, which has forced citizens to act. The other is to applaud this collective action for it is not easily achieved anywhere. Game theorists say that dumping garbage on the street is rational behaviour for individuals because it is cheaper (even though it is socially undesirable). The benefits of a clean street are public whereas the costs are private. Cooperation, in examples such as Exnora, demonstrates that commitment of individuals can overcome this negative rationality. Here is to that commitment!


The recent World Cup of football entertained 1.5 billion around the world, and people drew all sorts of lessons, but it confirmed to me once again the role of luck in human affairs. At crucial moments, it was not skill that separated winners from losers but chance, and part of the peculiar beauty of human excellence on the football field is, I expect, its vulnerability to things we cannot control. If it was skill alone Brazil should have won all the 14 World Cups, as the German coach confessed. Yet, I want to believe that human excellence and governance play a bigger role in our lives than blind luck. Something in me says that luck is something that we can earn, and it seems to favour the determined ones like Dhirubhai Ambani, who had the skill to know how to guide his luck even while waiting for it. EB White used to say that luck is not something you can mention in the presence of self-made men. Even in football the success of the underdogs--Korea, Turkey and Senegalcame more from determination than fortune. In a wonderful book, The fragility of goodness: Luck and ethics in Greek tragedy and philosophy, Martha Nussbaum writes that we sometimes find ourselves, through no fault of our own, in situations where catastrophe, revulsion and remorse are inevitable. We cannot make ourselves entirely safe from bad luck but as rational persons we try to plan our lives to avoid it. One of the ways that we try to reduce the role of chance is through politics--by electing leaders who will deliver us peace, law and order, and good governance. A few months ago we were aghast when a truck killed the lovely Puja Mukerji near our home in Delhi. We knew her--she had recently acted in my play, 9 Jakhoo Hill. Some of her relatives consoled themselves, saying it was her karma, but I thought that it was a failure to enforce traffic rules. I am afraid to drive in Delhi because I fear that the driver next to me on the road may have got his licence by bribing someone. In the Mahabharata, Draupadi argues that one has to strive even if the fortuitous drift of events may nullify one’s effort. She says that a farmer fulfils his duty when he has ploughed his field and sown the seeds. After that it depends on the rain. If the rain fails and the crop withers, the fault is not his--blame it on his karma. Today India’s farmers, however, talk less about karma and more about irrigation. Enforcing traffic rules and providing rural infrastructure are some of the ways that a good state reduces the role of luck in our lives. Nonetheless, our lives remain contingent, and in attempting to cope with the unexplainable, I find the Indian notion of karma comforting and elegant although I do not subscribe to its metaphysics. Karma places moral responsibility squarely on the individual for his moral attitude and acts and makes fate an outcome of the individual’s deepest longings. My favourite karma story is that of Gautami in the Mahabharata whose child is bitten by a snake and dies. A hunter catches it and wants to punish it, but the snake pleads innocence, saying that it acted under instructions of Death. Death claims that it was under orders from Time; and Time argues that it was not its fault because the child died as a result of it previous actions. At this moment Gautami realises that she too might be responsible for the tragedy for she had committed certain wrongs in her past. At that moment she becomes a moral agent. The sensible Vyasa, the author of the epic, seems to agree with Nussbaum that the peculiar beauty of human excellence is its vulnerability, but human beings have to be accountable for their lives. Hence, we can admire and praise the Brazilian striker, Ronaldo, even though we know that he is not entirely in charge.


The stubborn persistence of child malnutrition in India is truly one of the tragedies of our time. Many of us have long agonised over this preventable problem, and we continue to ask, why do half our children not get either enough or the right food or adequate care? Even in sub-Saharan Africa only thirty percent of the children are malnourished versus fifty percent in South Asia. And this 20-point gap exists despite our much higher levels of per capita income, education and even safer water access. One-third of the babies in India are born with low birth weight compared to one-sixth in sub-Saharan Africa. This is heartbreaking given the dramatic improvements in our agriculture, advances in literacy, and great strides in economic growth. For more than 20 years, India has even “sustained the greatest effort in history to improve nutritional standards,” according to UNICEF, through its Integrated Child Development Services Programme. So, it is not for lack of effort. Nor is it due to poverty, which has been steadily declining by one percent a year for two decades. What then accounts for this puzzle? In 1996, India’s famous physician-nutritionist, the late Professor V. Ramalingaswami (with others) wrote a groundbreaking article on this anomaly called “The Asian Enigma.” After considering different factors, including access to food and income and our vegetarianism, he concluded that the lower status of women in South Asia might be the reason. The link between women’s position and child nutrition seems plausible. In many Indian homes men eat first; women have to make do with leftovers. And this is perhaps why 83 percent of women in India suffer from iron deficiency anemia versus 40 percent in sub-Saharan Africa. A malnourished mother will give birth to a baby with low birth weight--the single most important predictor of child survival. Moreover, the pressure of domestic work often forces a mother to delegate to older siblings the irritating chore of feeding solid food to her baby. If women had more control over family income and decisions they would devote them to better pre and post natal care and to their children’s needs. So far this was the theory. But now an extensive empirical study by the International Food Policy Research Institute and Emory University seems to confirm Ramalingaswami’s hypothesis. The study brought together data from 36 developing countries, spanning over one hundred thousand children under the age of three and an equal number of women. It measured a woman’s position in the home in various ways--whether the woman works for cash, her age at marriage, and the difference in age and education between husband and wife. The study concludes that the lowly position of women in the family compared to men is the single most important reason for the gap between South Asia and sub-Saharan Africa in children’s nutrition, followed by sanitation (e.g. the lack of latrines) and urbanization (slum living). A woman’s low place in society also prevents the active use of health services by women and children. While reading this report I wondered why is the position of women in India so much worse than that of women in other societies? The report seemed to suggest that the South Asian women were not so far behind African women as the way their inferior status limited their ability to nurture their children. I also questioned whether the tragedy of children’s well being is only a woman’s issue, or is it a family concern where men play a crucial role. I suspect there are no easy answers, but they are worthy subjects for further research. Women everywhere suffer from a lower status, but in India it appears to have devastating consequences. The policy implications are clear: if we want to reduce child malnutrition, we must combine our child programs with efforts to improve the situation of women in our society. To succeed in the knowledge-based economy, we need healthy children who will become tomorrow’s innovative adults. If we ignore gender inequality, we will continue to produce stunted children, wasted lives, and untold misery.

A FINE BALANCE 11/08/2002

Last week I met a young lady from Japan. We got talking and she said that she was travelling around India exploring our spiritual traditions. In an unguarded moment she admitted that she was seeking solace from her lonely, banal and desperate life and hoped that India might offer her a spiritual guide to the art of living. Nothing unusual in that, I thought. She is part of a great tradition of travellers to India who have sought consolation from the material world. The tendency goes back to Fa Hien and Huan Tsang, two Chinese travellers in the first millennium AD, who came looking for Buddhist wisdom. And today young tourists come in hordes seeking an alternative way to live their lives. We in India respond to this with pride. We are not shy to contrast our spirituality to the materialism of the West, often as a way to shore up our self-esteem. But in the process, our view of ourselves has become lopsided, and we have forgotten that other worthwhile goals always informed classical Indian life--for example, artha (prosperity) and kama (pleasure). We have also forgotten our many wonderful rational traditions. Life in ancient India was more balanced and moksha (spiritual liberation) was only one of the multiple ends of human beings. There were renouncers to be sure, and many like the Buddha and Mahavira became extremely celebrated, but the mainstream followed the normal life of the householder pursuing a balance between the mind and the spirit. When around 500 BC, asceticism became widespread and an increasing numbers of intelligent young men “gave up the world” to search for spiritual peace, Brahmins responded by devising a theory of the balanced life of four ashramas, dividing the life of the twice-born into four stages: the brahmachari (celibate student); the grihastha (married householder); the vanaprastha (forest dweller); and sannyasin (wandering ascetic). There was always some tension between asceticism and sensuality, between the aspiration to liberation and the heartfelt desire to have descendants, between an active life of meritorious works (pravrtti) versus the renunciation of worldly activity (nivrtti). The Upanishads valued renunciation; the dharma texts argued that the householder who maintains his sacred fire, procreates children, and performs his ritual duties also earns religious merit. However, in medieval times we lost this fine balance, partly under the sway of bhakti and the devotional cults, and too many began to think of the world as maya (illusion). Oddly, the same thing happened in the west. Christianity overwhelmed life in the middle ages and people lost their balance. But beginning with the Renaissance in the 15th century and culminating in the Enlightenment in the 18th century, the west recovered its Graeco-Roman past of plural ends, and Christianity ceased to be its ‘informing principle’. Westerners relearned Aristotle’s teachings that the good life had multiple ends, with friendship being a prominent one. Thus, a multi-dimensioned modern personality appeared in the west, which kept religion in one compartment. Some Bengalis became aware of this in the 19th century; they questioned, attacked, and began to cleanse and contemporise our religious traditions and they went on create a mini-renaissance. Their movements gained confidence from the work of western scholars, who had discovered the historical foundations of our culture, a confidence which not been shaken since. But clearly these movements did not go far enough and we continue to be under the sway of superstitions and obscurantism. We need once again to restore the classical balance between the sacred and the secular. Indian spirituality is a wonderful gift to the world. So is our individualistic tradition--the only land where the renouncer has successfully challenged kings, priests and the social order. However, if we want to be a successful modern society, religion must not be the defining principle of our rich, multi-dimensioned lives. Every other Sunday I have been writing about unbinding India. My emphasis has been mostly economic--securing our freedom from the licence raj--but now I realise we will not be truly unbound unless we recover this fine balance.