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.

IGNORE PAKISTAN, HEED CHINA 27/01/2002

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.

TURN ON THE LIGHTS 24/02/2002

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.

TRAIN TO NOWHERE 10/03/2002

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!

DISAPPOINTED IDEALISM 05/05/2002

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.

A MATTER OF CIVIC PRIDE 19/05/2002

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, (exnora@vsnl.com) 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!

GUIDING YOUR KARMA 14/07/2002

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.

A SOUTH ASIAN PUZZLE 28/07/2002

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.

Times of India 2001 Columns

MIRACLE IN PATAN 14/01/2001

I was in Kathmandu recently, where I had gone for my nephew's wedding. It turned out to be a warm family affair with plenty of good food and good feeling. This was before the Hritik Roshan episode, and there was lots of sunshine, attractive women, and beautiful clothes. But what took my breath away was the Patan Museum, which is arguably the best museum on the subcontinent with plenty of lessons for us in India. The museum displays the traditional sacred art of Nepal in a wonderful setting. Its home is an 18th century royal palace of Kathmandu's Malla kings, restored lovingly by Gótz Hagmúller and others, with funding from Austrian and Nepali sources. Its gilded door, guarded by two ferocious bronze lions, faces one of the beautiful squares in the world. Inside is an exciting collection of 200 sculptures and objects that transport one into the rich living traditions of Hinduism and Buddhism. This in itself is not exceptional. Many Indian museums are housed in grand buildings and contain equally rare treasures. What is exceptional is the world class presentation, the quality of the display, accompanied by educative commentary, impeccable maintenance and expert management. There is no dust, filth or anything shoddy, which alas, are the defining qualities of our museums. Museums in India are usually run by bored bureaucrats, who don't even have the authority to replace a light bulb. The treasures are poorly displayed, poorly guarded and poorly maintained. They depend on annual government grants, which are eaten up in staff salaries. The end result is that our museums appeal neither to local people nor to foreign visitors. They don't achieve their educational aim or their tourist potential. The creators of the Patan Museum were aware of these pitfalls, and their biggest victory was to convince the government to let it be a semi-autonomous body, with an ability to raise revenues, employ its own staff (not bureaucrats), and manage its pricing policy and budget. Its entrance fees are Rs. 10 for Nepalis, Rs. 30 for SAARC tourists and Rs. 120 for foreigners. It supplements the fees through revenues from an outstanding Museum Café in the landscape palace gardens, which is run by professionals and a gift shop that sells lovely posters, art books, and post cards. The end result is a self-sustaining, world-class museum that attracts 40,000 annual visitors or 5 per cent of all tourist arrivals in Nepal. It has been acclaimed around the world and its growing popularity guarantees it a sustainable, self-reliant future. A decaying old building has won a new lease of life as a cultural preserve that will be Nepal's pride for generations. Now, here is an idea for India's many languishing museums. Some will ask, how can we allow our national treasures to be managed by non-government institutions? Others will protest why do we need foreigners to restore our palaces and design our museums? The simple answer is that museums need people with special skills, a unique knowledge base, and a passion for art history and aesthetics. Museums are public spaces, but they don't have to be run by governments. The best museums in the world, especially in America, are managed as autonomous citizens' trusts. Expertise has no colour, and the issue is not swadeshi versus videshi. The challenge is to get passionate experts to run our institutions rather than bored bureaucrats. To be afraid of foreigners is the sign of an inferiority complex, and Tagore reminds us that "Whatever we understand and enjoy in human products instantly becomes ours, wherever they might have their origin." So, are there high-minded Indians who care enough about their heritage to come together, raise funds in India and abroad in order to upgrade our museums and be willing to convince our government that our museums should become semi-autonomous, self-sustaining institutions? To be sure the cultural bureaucracy will resist, but the truth is that our government doesn't have money. It might welcome a Patan type initiative, which will make our museums self-reliant. Once that happens we can dream of a Gótz Hagmúller to create magic one day in the Chola bronze gallery in Chennai. In these troubled times between Nepal and India, this will be our best compliment to our neighbour. While on the subject I, for one, do not think that Ayodhya needs a new building. But if there is "national sentiment" in its favour, as Mr. Vajpayee believes, I hope it will be a world-class monument to India's multi-faith diversity. I would invite one of the world's top architects--a Frank Gehry, Richard Meir, I.M. Pei, or Charles Correa--to design it. That will do more for Ayodhya's pride and tourism. Recall, Nehru had the courage to invite Corbusier to design Chandigarh. Now, here is another idea, Mr. Vajpaye.

DON'T ROB PRASHANT'S FUTURE 28/01/2001

For the past twenty five years we have owned a small coconut farm in a village in Maharashtra. If this does not make me a full blooded Maratha, it does make me at least an honorary Maharashtrian in my neighbours' eyes. Bhiku, our gardner,looks after our wadi, and we have seen his children grow up nicely over the years. I have always taken a special interest in his eldest boy, and when the Enron power plant came up I confidently predicted thatPrashant would have a shining future. The main obstacle to our village's prosperity is perennial shortage of power, which inhibits commercial activity. Although Enron has made Maharashtra surplus, our village still does not get power on Fridays and brown-outs define our other days. Across the harbour is Mumbai where people get plenty of power, and entrepreneurs set up industries, call centres and software companies and create thousands of jobs every day. Who is robbing Prashant's future, especially when our state now has abundant electricity? Most people blame Enron, and they expend enormous amount of negative energy in blaming the foreign devil for selling expensive power. The truth is that Enron's power is not more expensive than similar new plants. Enron's power appears expensive because Maharashtra's electricity board (MSEB) buys only half the power that Enron can produce and this makes Enron inefficient. If Enron could run its plant full blast, then the cost of its power would be Rs. 4.02 per unit. Even a new thermal plant like NTPC's Kayankulam plant produces power at Rs. 4.50 per unit. Enron's notorious Rs. 7.80 tariff was a fluke for the month of July when MSEB bought only 30 per cent of Enron's power. The rise in oil prices and the rupee's depreciation have not helped, but the main problem is MSEB's inability to buy enough power from Enron. If you buy a monthly train pass for Rs. 100 and use it only once then your journey costs you Rs. 100. But if you use it 100 times then each journey costs Re 1. If you create a fixed asset you should use it as much as possible. Maharashtra's electricity board behaves in this irrational way because it is bankrupt. It doesn't have money to buy Enron's power because it sells power below its cost. If a mango seller buys mangoes for one rupee and sells them for 50 paise, she too becomes bankrupt. MSEB has 13 million customers and of these 11.8 million get power below cost. 9 out of 10 Maharashtrians pay 42 paise per unit and 1 out of 10 pays Rs. 5.40. In addition, many of its customers steal power. Hence MSEB loses Rs. 5 crore per day. Mumbai, however, has plenty of power because MSEB does not distribute it. Professional private companies like BSES do, and they ensure that their bills are collected and they don't let anyone steal their power. Hence, Transmission and Distribution losses are only 9 per cent in Mumbai while they are 31 per cent in Maharashtra. The truth is that if some people have to pay 13 times more than others then no amount of policing by MSEB will help. The answer, of course, is to charge customers what it costs to produce electricity. This is easier said because no politician has the courage to raise tariffs to farmers and risk losing his assembly seat at the next election. MSEB must also learn from Mumbai and privatise power distribution. The crux of the problem facing Enron and every other independent power producer in India is that they have the freedom to generate power but they do not have the freedom to sell it. In a power starved country we should encourage Enron and all our power plants to produce as much power as possible (which will lower production costs). Put this power on the national grid, and open the trading of power to private entrepreneurs. Private companies will bid for power from generators and sell it directly to consumers. Those who want high quality power, without interruption will be willing to pay more. So will customers who live in power scarce areas. Consumers will be able to choose between different suppliers and from a menu of prices. During peak hours rates will rise, but eventually when supply exceeds demand prices will decline, as they did when cement was liberalised. So Prashant, don't blame Enron for spoiling your future. Blame Maharashtra's ugly politicians and the incompetent MSEB. In the next election vote for the candidate who promises to make everyone pay the real cost of power, privatise distribution, and sack MSEB linesmen who steal power. Remember, only insecure people blame foreigners for their own troubles.

SEEDS OF GODLIKE POWER 11/02/2001

Inspired by one of Emerson's essays, Mathew Arnold, the English poet, wrote in the 19th century about the "seeds of godlike power". He was referring to a human being's great potential for progress, but his happy phrase fits the new miracle seeds that will help India create a "second green revolution". The seeds are a product of biotechnology. They are resistant to pests, and the farmer doesn't need to spray his crop with pesticide. Farmers love them because they don't have to spend on costly pesticides and they raise yields and income by 30 to 50 per cent. Consumers like them because the food is less toxic and more nutritious. Many seeds are also nutritionally enhanced. For example, you won't feel guilty eating the new potatoes because you will get protein in addition to starch in your diet. No wonder, the seeds cover 44.2 million hectares in 13 countries on six continents. Eight of these countries are industrialised and five are developing. In the past five years, genetically improved crops have grown 25 fold in acreage--a dramatic rate of adoption for any new technology. Tragically, India's farmers have not been allowed to experience this miracle. China, our rival, has beaten us in this race as well. The new cottonseed, called Bt cotton, is especially popular because it is resistant to the dreaded bollworm, which attacks 70 per cent of India's cotton crop and destroys 35 to 50 per cent of it every year. Hence, 36 per cent of the US and 10 per cent of Chinese cotton crop is planted with Bt cotton. If our Andhra farmers had used it, their crop would have survived and we might have prevented suicides. Bt cotton is not available to Indian farmers because our regulators have not approved it despite 6 years of successful trials by Maharashtra Hybrid Seed Corporation (Mayco), the seed company. Similarly, Proagro's mustard seeds have been tested to death for 7 years and they have not been yet been approved. Chinese bureaucrats, in contrast, take a more practical approach. They saw that Bt cotton was being extensively used in America and a dozen countries, and it had cleared the rigorous requirements of the US FDA. So, they decided not to re-invent the wheel, but to merely check Bt cotton's bio-safety in their soil and climates. Hence, 18 months after trials, Chinese farmers had begun to enjoy its fruits while Indian farmers were committing suicides. Our two largest cotton growing competitors, the US and China have, thus, taken a lead over us. When global agricultural markets open up--and the day is not far--our rivals will be better positioned because their costs will be lower and their yields higher. As with any breakthrough, genetically improved seeds have plenty of critics, especially in Europe, including Prince Charles. They are creating a scare in people's mind without a shred of scientific evidence. Since most seeds are the discoveries of international companies, there is also the usual anti-MNC prejudice. European NGO's have funded Indian NGOs in order to stop transgenic seeds here and they are spreading plenty of disinformation. They have even taken the Indian government to court for approving the Bt cotton trials. Meanwhile, Professor Nanjundaswamy instigated 3000 farmers in Karnataka on January 3, 2001 and they approoted Mayco's trials in 2 locations. According to scientists, the European stand is emotional and based on unknown future risks and not on data. But these vocal critics have slowed our bureaucrats and made them timid. Fortunately, our bio-safety regulations are in place and our trials are well advanced. If they are not stopped either by obstructive bureaucrats, or eco-terrorists or the courts, the Indian farmer will be able to plant the miracle cotton in the next season, mustard in 2002, potato, tomato, cauliflower and brinjal in 2003. Transgenic wheat is ahead of rice but the farmer won't see it before 2005. Remember, India has only 2 per cent of the world's arable land, 1 per cent of the world's rainfall but 16 per cent of world's people. Indian farm yields are only half or one-third of our competitors. The hybrids of the first green revolution have stopped giving productivity gains. Remember, also, that our first green revolution in the sixties was not an accident. Bold individuals created it--they flew in the new dwarf wheat from Mexico and distributed it to Punjab's farmers. Had they waited for endless trials, our first green revolution would not have happened. In comparison, our second green revolution so far is a sordid tale of apathetic, timid bureaucrats, misguided NGOs and eco-terrorists who are robbing our farmers' future.

A HERO FOR OUR TIME 25/02/2001

Every nation must have its heroes. Having lost its stars of the Independence age, Indians have been desperately seeking new ones who can inspire them in these dispirited post-reform, post-Mandal, post-modern times. Narasimha Rao, like Deng could have been one such hero. Deng has become a hero to contemporary China and has supplanted Mao in Chinese hearts. Although Rao created an economic revolution between 1991-93, he was not a visionary; he was only a reluctant reformer. Now mired in corruption cases, he is no longer respected. V.P. Singh could have been a hero. He released a social revolution as he attempted to raise the backward castes in our society. But most Indians saw through his electoral ambitions. In the end, he divided society and seriously compromised standards. If he had genuinely cared for the backwards he would have delivered them education and health, and that would have truly lifted them over the long term. Manmohan Singh and P. Chidambaram are hero candidates. Indeed, with a solid record of achievement in reform, they are already heroes to the young. But politics has not been kind to them and they have been languishing in recent years. We are shy of politicians today and look to individuals with narrower but concrete achievements--to V. Kurien, for example, for making India the largest milk producer; to Sam Pitroda for inventing the STD call centre in the bazaar; to C. Subramaniam for our green revolution. Who ought to qualify to be our hero in the post-reform age? Many would agree that it is individuals who succeeded by helping themselves, who made a difference to society through their own efforts rather than the patronage of others, especially the government. Leftist intellectuals call this ethic "selfishness" and "greed", but it is rags-to-riches stories like Narayana Murthy's that resonate with our times. Recently I was reading Ashish Nandy's fascinating, An Ambiguous Journey to the City, where he discusses Karna, and it struck me that the mythic hero of the Mahabharata, might qualify as a hero. Of uncertain birth, insecure and defiant, Karna represents the predicament of a self-made person in an insensitive society that is not quite ready for individualism and competitiveness. His fight against the Pandavas is an attempt to break out of his lowly status as a charioteer's son and affirm the values of personal achievement and competitive individualism. If we cannot find a hero in the flesh we might as well import one from mythology. Karna, as every school child knows, was born of the princess Kunti, who had a boon that allowed her to have a child by any god that she wished. Whilst still young and unmarried she invoked through her prayers, the sun god. As a result, she conceived and gave birth to Karna. Fearing a scandal, she stealthily placed the child in an ornate casket and left it to float on the Ashva river, where a humble charioteer, Adhiratha and his wife Radha found him, and bought him up to be their son. Meanwhile, Kunti married the sickly Pandu, the prince of Hastinapur, who was cursed to die if sexually aroused. So Kunti exercised her boon and had children by the gods. These were the famous Pandavas who went on to fight the Kauravas in what became the Mahabharata. Meanwhile, Karna grew into a brave and gifted warrior, but he was subjected from birth to jibes about his humble birth and his princely ambitions. When young he challenged his half brothers to competition. They refused--competing with princes was a princely privilege. Karna was again humiliated when princess Draupadi refused to marry a charioteer's son even though he had won the right to do so in fair competition. Embittered, Karna turned to the Kauravas for friendship. This worried Krishna, who revealed to Karna the secret of his birth on the eve of the great battle and pleaded with him to join the Pandavas. He offered him, in return, the prize of Hastinapur's kingdom and Draupadi's hand in marriage. Kunti and Surya, his natural parents, begged him as well, but Karna was loyal to his word, and refused to betray the Kauravas, who had elevated him to a kshatriya and a prince. In the end, like a good hero, Karna knew when to die, and he went down unvanquished, killed through Krishna's trickery. Although he walks out of the pages of the Mahabharata, this Karna seeks power and legitimacy for a new ethic and a new mindset. He defies his low caste; he celebrates achievement in a competitive society; he stands for individualism and a "can do" attitude. He seeks legitimacy for the rustic and lowborn in a secular city. He could well be a hero for our times.

Hail, a new dawn! 11/03/2001

Praise has been showered on Yashwant Sinha's Budget, and deservedly so. There is much to laud and everyone has his favourite measure, but I am happiest that agriculture has finally entered the reform agenda. I am pleased because we have a comparative advantage in agriculture--something we do not enjoy in industry. By investing in agricultural reform we will get a "bigger bang for our buck" as the Americans say. The timing is good because we sit comfortably on a grain mountain, forty million tonnes high. Both domestic and international prices are down. So, no one seriously worries about food security. Agricultural reform is a big agenda and there is no point talking of globalisation or WTO when the Indian market is not free. Our farmers are victims of archaic laws that prohibit them from selling their produce freely within the country, traders face limits on how much they can buy and stock, mills face levy burdens on rice and sugar, prices are distorted by politicians. All this is incompatible with a modern, successful economy, but the biggest change we need is in our mindset. We still labour under a scarcity mentality. All our policies are aimed at achieving self-sufficiency when we achieved it 20 years ago! Year after year we produce wheat and rice surplus that piles up into a mountain for the enjoyment of rats. How can a nation be so stupid? Instead of a defensive mentality we need an offensive, exporting, "can do" attitude, which regards the WTO as an ally, not an enemy. No country became a successful agricultural power through peasant farming--this is the second mindset change. Farming is not a "noble profession"; it is agri-business. Ask any peasant--his son doesn't want to be a peasant. We must treat farmers as businesspeople. Our green revolution succeeded because we treated Punjab's farmers as capitalists. Our farms need a huge infusion of capital and technology in order to raise yields and compete globally. Peasants cannot make this investment. Neither can the government for is it bankrupt. Hence, we must free peasants to lease their lands to agri-business professionals with capital and technology. Thus, we will stage the second green revolution and become an exporter in a world economy. All our agricultural institutions are stagnant or defunct and incapable of reform--extension services, co-operatives, FCI and dozens of others. Five ministries interfere in our farmers' lives--Agriculture, Fertilisers, Water, Food, and Consumer Affairs--and there is no co-ordination, professionalism, or result orientation. It takes 6 months to import a commodity, and by then we don't need it, and 5 months to export it when prices have plunged. Hence, we need to trust the individual and the market and not the government--this is the third change. Mr. Sinha has struck a big blow for agriculture reform, not through budgetary measures, but by challenging these old mindsets. He has promised to free inter-state trading--this means he will amend the archaic Essential Commodities Act. He will lift storage and stocking curbs, which hurt farmers and diminish their incentive to produce. A 24 per cent expansion in rural credit (to Rs. 64,000 crores) is significant, especially for creating rural godowns and cold storages to boost the farmer's holding power. Chopping the Food Corporation's role and decentralising food management will bring down subsidies, avoid needless stockpiling, and rat feasting. The introduction of a futures market ensures a soft landing for sugar decontrol. Perhaps, the boldest move is to remove excise duties on food processing, which could usher a horticultural revolution and transform our fruit exports. My favourite measure is agri-clinics or agri-business centres, financed by NABARD loans, which could unleash thousands of agricultural graduate-entrepreneurs. It leverages knowledge and marks a new era of private farm services--in testing soils, plant protection, seeds, marketing, post harvest handling, etc. Farmers will pay for result oriented, private consultancy instead of free, apathetic government extension service. Just as our IIT graduates become millionaires, it is now the chance for our 17,000 annual graduates of agricultural colleges. Each clinic will need on average 3 graduates and 9 technicians, and this could also create vast employment for the educated in rural areas. I have two criticisms though: One, the absence of a food-for-work program to reduce the present grain mountain, and two, the absence of reform in our mandi or post-harvest system. With 15 per cent of our food (worth Rs. 24,000 crores) wasted, we must at least experiment with a modern system of silos and mechanised, bulk handling. India is not a tiger but an elephant--hence our reform process is frustratingly slow. As a first step, agriculture needed to be placed on the national reform agenda. This Mr. Sinha has done.

IF INDIA CAN, WHY CAN'T WE? 25/03/2001

The English have been surprised by Professor James Tooley's observations that India can teach Britain something about education. This is unusual spin over the usual foreign expert who patronisingly offers us advice on how to improve ourselves. Indeed, when Tooley wrote about this in the Times Education Supplement his editor was so perplexed that he inserted a photo of an impoverished school in Bihar with a caption, "Education in India has a lot to teach the British"--implying, may be, that the good professor had lost it. The professor of education from Newcastle has been documenting a "self help" revolution in Indian towns and villages as education entrepreneurs are opening private schools and creating opportunities for the poor to rise. Most Indians would agree that private schools are indeed mushrooming across India (although they worry about their indifferent quality.) This may explain, in part, why literacy has grown at double our historic rate--1.4 per cent a year between 1992-1998 versus 0.7 per cent between 1950-1990. Professor Tooley argues that India's blossoming spirit has much to teach England's poorer inner city areas. Most of us were shocked 18 months ago when the government sponsored Public Report on Basic Education in India (PROBE) disclosed that teaching was going on in only 53 per cent of government schools in M.P., Bihar, U.P., Rajasthan villages. Teachers were absent in one-third; many had brazenly closed their schools and were busy running shops. Some teachers were found drunk and a few even expected pupils to bring them "daru". A few were asleep; others engaged children in domestic chores, including minding their babies. Given this, is it surprising that parents are turning to private schools in more and communities? PROBE confirmed that village private schools, in contrast, had "feverish classroom activity" and more dedicated teachers. The reason, it said, was that teachers were accountable to managers (who could fire them) and to parents (who could remove their children). Research shows that these private schools charge modestly--from Rs. 35 to Rs. 50 per month in villages and Rs. 65-100 in towns. They are also popular because they teach English. In the slums behind the Charminar, in Hyderabad, a private school exists in every alley. 500 such schools belong to the Federation of Private Schools, and they are mainly in poor communities. They are run on commercial principles charging Rs. 750 per year and do not depend on state subsidies or private charity. Typical parents include rikshaw-pullers and vegetable and fruit sellers, and many schools offer free seats to roughly 20 per cent of the poorest students. Professor Tooley has observed this same phenomenon in Thailand, Columbia, Tanzania, and Chile. Cheap private schools are doing more for the poor since state education has let them down. What should we do? We must not only fix the shocking state of our government schools, but we must also nurture and encourage private schools. Today, private schools face great hostility because we have not got used to the idea that education can be commercial. Indeed, the infamous Unnikrishnan judgement of the Supreme Court prohibits "commercialisation" of education. The bureaucracy exploits society's prejudice and has created a virtual license raj. It makes it impossible to start a new school without paying a bribe. Education entrepreneurs face a plethora of regulations, which limit competition, create artificial scarcity, and allow existing schools to exploit parents. Their major problem continues to be "recognition", which requires that schools have playgrounds among dozens of other requirements. All very well, but private schools for the poor cannot afford these middle class luxuries. Indeed, the PM's Economic Advisory Council has recognised this problem and has recommended that "education must be liberalised and all entry-exit restrictions and bureaucratic hurdles faced by [private] schools and colleges should be abolished." We should also ask hard questions. Given the shocking state of government schools, can we trust the state to deliver education? If we can't trust it to produce bread, how can we trust it with the minds of our young? It is one thing to believe that the state must provide money for primary education, it is quite another that the state must be in the business of running schools. Wouldn't it be better if our state schools were managed by NGO's, education professionals and entrepreneurs on a contract that was renewable based on performance? Indeed, there exist NGOs today who already run parallel schools (inside government schools during off-hours) and they deliver excellent results. This change won't occur overnight, but meanwhile we can make a beginning and become more understanding of these new private schools and fight against the license raj in education.

REVISITING INEQUALITY 08/04/2001

Last week I walked into our neighbourhood chemist's and the shop assistant gave me a look that spoke a thousand words. He looked me straight in the face and his eyes said "treat me as an equal". He sought equality based on dignity and mutual respect, and his disarming expression, it seems, had already got him in trouble. For the Punjabi woman ahead of me complained to the chemist. She used the nice Urdu word "tamiz", which roughly means "courtesy", but in her feudal mind it really meant that the shop assistant was not sufficiently servile. When she left the chemist confided in me, "this boy is good and efficient, but he is a Dalit from Bihar and his manners seem to put off my customers." Walking back I was reminded of George Orwell's description of social equality in "Homage to Catalonia." There he describes the waiters in revolutionary Barcelona "who looked you in the face and treated you as an equal." The Indian middle classes, used to feeling superior to the lower castes, are now going through disconcerting times as Laloo Prasad and Mayawati have given the OBCs and Dalits a new sense of confidence. We are in the midst of a social revolution that has been created by the ballot box. As economic reforms deepen and prosperity becomes widespread this will only accelerate. The latest poverty figures confirm what we are seeing around us. The Planning Commission reports that people below the poverty line have declined in the nineties by ten percentage points. Somehow cold percentages don't quite capture the enormity of the achievement until one realises that 10 per cent of one billion means that 100 million people have been lifted out of poverty in less than a decade. China, incidentally, achieved more or less the same in the eighties. Nevertheless, there exists huge inequality in our society and between rich and poor nations. Leftists claim that inequality has grown in recent times and globalisation is its cause. This is plainly false. In fact, for the first time in two centuries global inequality has actually begun to decline since the 1980s, and this is mainly because living standards in China and India (to a lesser extent) have begun to rise as growth has accelerated in both countries. China has done far better than India because it has taken better advantage of globalisation. Its reforms have gone deeper, its exports have grown brilliantly, and it has received far more foreign investment. Critics of reform and globalisation--such as the powerful voices in the Congress, RSS, and CPM--should seriously learn from China before they force India to turn inwards, and condemn our poor to perpetual poverty. Soon after the chemist episode, I was at a social gathering where people were avidly discussing the six recently minted MBAs at IIM, Ahmedabad, who had won starting annual salaries of more than a crore and the average for the class of Rs. 18 lakhs was not bad either. The gathering felt righteously indignant, and people blamed liberalisation. I felt, like Justice Holmes, that their passion for equality was merely "idealised envy". These two episodes--the equality sought by the Dalit and the inequality created by the IIM graduates--left me vaguely uneasy. The cause of our discontent, I'm increasingly convinced, is that we confuse inequality with poverty. Everyone agrees that there should be equality of opportunity. This means that every child should have access to a good school, primary health care, and safe drinking water irrespective of birth and ability, and we should minimise the headstart that some children have over others based on caste, gender, or birth. This however, is very different from an equality of result or an equal standard of living that leftists seek. Absolute equality is desirable but it is not possible because it goes against human nature. Most of us would happily accept rich people or an increase in inequality among the middle classes provided it leads to even a small improvement in the conditions of the poor and the most disadvantaged. It is more important to raise the poor than worry about inequality. Economic reforms are bound to increase inequality that comes from open and free competition. But that does not mean that they will worsen the situation of the poor and the most disadvantaged. It is stupid to think that every inequality worsens the condition of the worst off. The IIT students' crores are the result of a competitive economy which in the long run will accelerate economic growth and eventually reduce the disabilities of caste, gender, and birth. Hence, economic reforms are not anti-poor, but they must be accompanied by an equal passion for reforming primary education, health and the delivery of our poverty programs.

WERE WE ONCE RICH? 22/04/2001

I am on a book tour of America as I write this column, and Americans sometimes ask, "Was India once really rich? Then why did it become so poor?" I remind them that Columbus had gone in quest of the riches of India but discovered America instead. Thinking he had found India, he called the natives "Indians." The name stuck and so has the linguistic confusion. It took the Portuguese five years to get over the humiliation that Spain, their enemy, had discovered America when it could have been theirs. In 1497, they sent Vasco da Gama the other way round the world. He did indeed find India's legendary wealth. He informed Portugal's King Manuel of "India's large cities, large buildings and rivers, and great populations." He spoke about spices, jewels, and mines. But he added that Indians were not interested in European trinkets and clothes. They made far better fabrics and trinkets themselves. In the European mind "Golconda" became the symbol of the haunting wealth of India. "The discovery of America and the passage to the East Indies by the Cape of Good Hope are the two greatest events in the history of mankind," wrote Adam Smith. At the end of the 16th century, economic historians tell us, India's wealth sustained more than a hundred million people. With plenty of arable land, its agriculture was vibrant with productivity comparable to the best in the world. There was a vigorous and large skilled artisan workforce that produced not only cottons but also luxurious products for the zamindars and the courts. The economy produced a great financial surplus, and the annual revenues of the Mogul emperor Aurangzeb (1659-1701) were more than ten times those of his contemporary Louis XIV, the richest king of Europe. This surplus supported the vast and growing Mughal Empire and financed spectacular monuments like the Taj Mahal. When the English later got to this wealth they found that India produced the world's best cotton yarn and textiles. To this huge industry they provided the powerful stimulus of European demand, and made it even richer. Thus, by the end of the seventeenth century India had a sophisticated market and credit structure and controlled a quarter of the world trade in textiles, according to Paul Bairoch. It had 22.6 per cent share of world GDP (or roughly America's share of the world's wealth today), confirms Angus Maddison. Indian cottons transformed the dress of Europe, and cotton underwear changed the standards of cleanliness and comfort in the West. The Indian peasant, however, was very poor. Francois Bernier, a French physician who spent twelve years in India, wrote about the decrepit houses of the poor, their humiliating lives and the dramatic inequality between the tiny rich and the impoverished many. Because the rapacious Mughal State took away something like half the agricultural product there was little incentive to improve the land. The merchants hid their wealth for fear of the tax collector. There is no easy answer to the problem that the country was prosperous and the people were poor. Lest we forget, 250 years ago peasants everywhere were poor and today's great disparities in income between nations did not exist then. The difference between Europe and India (or China) was 1.5 to 1 versus 20 to 1 today. The English, who learned about textiles from India, soon turned the tables in the late 18th century. They began making textiles with machines and this began the West's industrial revolution, and brought it amazing prosperity. As a result, handloom weavers were destroyed all over the world, including India. We blamed the Britain for impoverishing us, but the question is why did India not experience an industrial revolution? The truth is that pre-British India was significantly behind Western Europe in technology, institutions and ideas. A scientific revolution had not occurred. How to make a poor nation prosperous is a more difficult question. The answer seems to lie in technology and institutions. Since Britain's industrial revolution there been for the first time in recorded history a continuous flow of inventions. Moreover, these have been absorbed commercially as profitable innovations. History teaches that a nation's ability to absorb these innovations and create an industrial revolution depends on having the right institutions in place--for example, property rights, schools, and stable governance. In the second half of the twentieth century, the Far East nations demonstrated that it can be done--a poor nation can become rich, and very quickly. They took less than thirty years to transform their societies, whereas the West needed a hundred. After the reforms India too is poised to do it soon--as long as we keep vigorously reforming our damaging socialist institutions and investing in education

DARKNESS TRIUMPHS 06/05/2001

There is no use pretending that the departures of N.K. Singh and Montek Singh are not going to hurt. They are. Two very different men--Montek is an elegant economist and NK is a natty networker, who knows how to turn every screw in the government's machine. But both are reformers. N.K. Singh has been transferred from the Prime Minister's office (PMO), where he coordinated the PM's economic agenda, to the Planning Commission. Montek is leaving to head the Independent Evaluator's office for the International Monetary Fund. Earlier, he was Finance Secretary, where he had spearheaded many an economic reform ever since the summer of 1991. Both men have fallen victim to the RSS and the swadeshi lobby. Although, Muralidhar Rao and Datta Pengdi may have precipitated N.K.'s recent departure, all anti-reformers are delighted. The communists, the leftists--the Samtas and Mamtas--and the considerable forces of darkness in the Congress would rather live with inefficient and corrupt public sector monopolies than have anything to do with competitive markets. Montek's achievements are well known, but NK too leaves a considerable record of reform, culminating in the recent path-breaking budget with dramatic reforms in labour, agriculture, and industrial policy. It contained both Mr. Vajpayee's and Mr Sinha's reforms, and was a product of teamwork between North and South Blocks, and NK's networking skills with the ministries were crucial. NK has left a mark on many Vajpayee initiatives: for example, the current momentum in building highways, the new "open skies" policy (held hostage for so long by the malicious civil aviation ministry), the decision to lease five major airports, the new energy behind ports privatisation, resolution to the telecom tangle via an excellent telecom policy--the ruckus over WiLL notwithstanding, and the soon to be announced liberalisation of drugs price control. Against these successes is failure in the power sector and the centre's inability to get the states to reform SEBs. The lack of initiative on Enron is also inexplicable. India cannot afford to let Enron blow-up and destroy our credibility with the world. At one go we could lose our reputation for honouring contracts. Remember, Enron's board members, James Baker and Kenneth Lay, are George W. Bush's closest friends. Reforms don't happen without reformers. Even the most reform minded minister needs a reforming officer to help build pro-reform coalitions in the bureaucracy, the party and in parliament. Few realise A.N. Varma's stellar role when he was Prime Minister Narasimha Rao's secretary. His legendary Thursday meetings with economic secretaries became the crucial instrument for the blistering pace of reform between 1991 and 1993. Mr Varma was a terror and ran his committee tightly. No one was allowed to travel on Thursdays. The committee met for only two hours, when the reform in question was openly discussed. Varma summarised and minuted the outcome and the reform proposal was taken to the cabinet for approval, and then on to the parliament. Many of us remember our excitement in those golden years as a new reform was announced every week. Just as Narasimha Rao had Varma, so Manmohan Singh had Montek. Chidambaram had Jairam Ramesh, and Vajpayee had N.K. Singh. These minister-officer partnerships have been crucial in making reforms happen. Those who criticise the PMO for becoming too powerful forget that in our political model ministries are independent and someone has to coordinate our chaotic government. It used to be the cabinet secretary, but when you want strategic management of change, then you require initiative and pro-activity. Who knows, a powerful, hands-on secretary might have been able to prevent the Fifth Pay Commission disaster--the lowest point in our economic history of the 1990s. To our worthy anti-reformers, who are gloating over N.K. and Montek's exits, I ask: how can you oppose the work of reformers who are trying to, for example, reduce the theft of electricity by employees of the state electricity boards? If this theft is reduced from 30 per cent today to only 18 per cent, there will be enough capital to build sufficient new power capacity. But the only way to stop thievery is by privatising distribution, for no private distributor will allow his power to be stolen. Thieves don't steal power in Bombay and Calcutta because distribution is private. Our anti-reformers retort, "don't privatise power, just catch the thieves!" Well, for fifty years we have not been able to catch them. Should we wait another fifty? Think about this--the next you oppose reforms and reformers you vote for public sector thieves rather than competitive markets. Liberalisation is not a matter of ideology. It is common sense to want clean, uncorrupt services. The only losers in privatisation will be thieves and lazy workers. The winners will be the Indian people.

A SENTIMENTAL EDUCATION 20/05/2001

We are well into our Indian summer and for teenagers this is a time to recuperate from the slogging drudgery of tuitions, coaching crammers, computer classes, board exams and college entrance tests. The summer job has not yet arrived in India. So, what does one do for "time-pass" in desi-land? My secret recipe for the enviably happy summer is to draw the curtains, turn on the cooler, sit in a comfortable old cane chair and begin to read. Feel your youth like a nimbus, and start to create a self. You don't inherit a self; you build it. One way to do it is to read the great books. Take a break at noon with lassi. Read some more after lunch and in the evenings treat your friends to dahi chaat and gossip-in part, about the books you are reading. For you never accept a text passively; you interrogate it. Smell the jasmine at night and go to sleep reading. There is no royal road to nirvana but only the many roads large and small, the innumerable curving paths, a thousand steps and turns leading to education. Begin with the Mahabharata, and feel the brute vitality of the air, the magnificence of chariots, wind, and fires; the raging battles, the plains charged with terrified warriors, the beasts unstrung and falling. Like the brilliant first scene in the Oscar-winning Gladiator, see the men flung facedown in the dust, the ravaged longing for home and family and the rituals of peace, as the two sets of cousins, bitter enemies descended from King Bharata, fall into rapt admiration of each other's nobility and beauty. It is an apocalyptic war poem, with an excruciating vividness, an obsessive observation of horror that causes almost disbelief. Since you are unlikely to read it in the original Sanskrit, look for R.K. Narayan's readable translation, and if that is not available try C.V. Narsimhan's version. Feast also on the great books of the West. Begin with Homer's Iliad and Odyssey in the Lattimore translation. Follow it up with the great tragedians--read Aeschylus' Oresteia, Sophocles' Oedipus and Antigone in the Grene translation and Euripides' Electra in the Vermeule translation. Then a bit of history-read Thucydides' History of the Peloponnesian War in Penguin classics. Finally, philosophy-read Plato's Symposium, Apology, and The Republic in the Hackett translation, and end with Aristotle's Nicomachean Ethics in the elegant Ross translation. The magic of an American undergraduate education is that it breathes life into the humanistic classics. Whether your field is chemistry or engineering, you are required to read the great books and learn that life and literature are inseparable. With a good teacher like Edward Tayler at Columbia you learn to read as though your life depended on it, and you are carried along on the crest of excitement and high adventure of ideas that will resonate throughout your life. Indian students are not so lucky. Not only does our traditional insecurity for jobs push our youth early into careers, our silo-like curriculum does not permit cross fertilisation of disciplines. Now, I ask you honestly, Shri Murli Manohar Joshi, isn't this what our mandarins in the Ministry ought to be thinking about? Instead of dabbling in the dubious mysteries of astrology, let's make our students immeasurably richer by breathing life into the great books of the East and the West. To experience the romance of a liberal education, I recommend David Denby's Great Books: My Adventure with Homer, Rousseau, Woolf and Other Indestructible Writers of the Western World. In 1991, thirty years after graduating from Columbia University, Denby went back to college and sat with eighteen-year-olds and read the same books that they read. Not just the ancient classics above, but also modern ones. Together they read Goethe, Kant, Milton, Cervantes, Marx, Conrad, Woolf and others. Denby was certainly a most unlikely student: forty-eight years old, film critic of New York magazine, a husband and father, a settled man who was nevertheless unsettled in someway. Was it just knowledge he wanted? He had read many of the books before. Yet nothing in life seemed more important to him than reading these books and sitting in on those discussions. Denby's book is an account of his journey, sometimes perilous, sometimes serene, through the momentous ideas he consumed with such hunger in middle age. He took the two "great books" courses, devised earlier in the century at Columbia, which spread to the University of Chicago, and in the 1940s to other colleges in America. In India, the triumph of the IIT-IIM culture and our current mania for computers, is producing too many graduates with a tunnel vision. We are not producing leaders for tomorrow's challenges. Reading great books is one way to make it happen.

INDIAN PARADOXES 3/6/2001

India, truly, is a land of paradoxes. For forty years political scientists have been debating how we became a vibrant democracy despite our poverty, low literacy and ethnic violence. Adam Przeworski's empirical study of 135 countries recently concluded that, given everything, India ought to have been a dictatorship (in his "Democracy and Development"). Indeed, the late and gracious Myron Weiner of M.I.T. wrote a charming book called "The Indian Paradox", in which he wrestled with the contradiction of how democratic politics could endure in our diverse and violent society. Now, here is another paradox. By any yardstick, the 1990s have been the best years in our recent economic and social history. Yet, it was also the decade of the greatest political instability. How does one begin to explain this contradiction? Conventional wisdom says that prosperity and stability go together and economic growth needs political stability. Does this mean that our economic sphere is slowly becoming autonomous from the political realm? Is this another example of Indian exceptionalism? There are five good reasons to believe that the last decade was our best, economically. First, our wealth or GDP grew at an average real rate of 6.4 per cent per year (and crossed 7.5 per cent for three years). No wonder President Clinton said the world's best-kept secret is that India has been the second fastest growing economy in the world. Second, our population growth has begun to slow down for the first time in decades--against a 2.2 per cent growth rate it had come down to 1.67 by 1998. Third, literacy growth doubled in the nineties--from its historic climb of 0.7 per cent a year to 1.4 per cent--hence, literacy rose from 52 to 65 per cent during the decade, with the biggest gainers being women and the backward states. Fourth, at least 90 million Indians rose out of poverty as the poverty ratio declined from 36 to 27 per cent between 1993-99--this is almost the same pace as China's in the 1980s. Fifth, we may have finally found our global competitive advantage in our booming software and IT services--what the economists call the "lead sector" that can transform the whole economy. These hopeful numbers offer a dramatic contrast to our political instability. We had six prime ministers in the nineties. Between 1989 and 1999 we changed our government every two and a half years compared to every four and a half years between 1951 and 1989. No single party has won an overall majority since 1984. Roughly half the incumbent representatives lost their seats in the nineties. And the once mighty Congress Party, which ruled the republic for almost forty years, has been humbled. Today, we have forty weak and silly parties and the ruling coalition has around 20 partners. Compared to India's vibrant economic space our political stage is a comedy, peopled by clowns, who do everything except govern. Not only is our economic sphere alive, our social sphere is humming. Lower castes have risen through the ballot box as a social revolution has taken place in the north. (The south experienced its social revolution decades ago.) We may laugh at Laloo and Mayavati, but they have given a new confidence to the backwards, and you can see it in the "walk" of the Yadavs and the Dalits. Cable television and other interventions have also decolonised millions of young, urban minds. Daler Mehndi, A.R.Rehman, Arundhati Roy, and Aishwarya Rai are products of this liberated mindset. More women are working outside and this is gradually liberating them from the old tyrannies of the family, the caste, and the village. We have also lost our hypocrisy about money, as the sons of Brahmins and Kshatriyas are getting MBAs and becoming entrepreneurs--this social revolution is, perhaps, rivalled only by the ascent of Japan's merchant class during the 1868 Meiji revolution. How, then, does one begin to explain the paradox of an economic and social revolution happening in the midst of political instability and poor governance? Professor Devesh Kapur at Harvard has found an answer in our polymorphic institutions which, he says insulate our political system. While the old formal institutions--the bureaucracy, the parties, public enterprises--have decayed or got clogged by interest groups, new institutions have emerged and old moribund ones have been rejuvenated, such as the Election Commission, CVC, the judiciary, NGOs, and the new regulatory agencies. This simultaneous cycle of decay and rejuvenation gives our system a certain resilience when political actors keep changing. Weak parties mean unstable coalitions, but they have also brought more federalism, less misuse of the evil Article 356, and a dilution of the BJP's economic nationalism and identity politics. Certainly, it a believable answer to another Indian paradox!

A HAPPY SURPRISE 17/06/2001

We are a nation so disappointed with itself that we have become immune to good news. So when it does come, we either ignore it or cynically dismiss it with a shrug. The latest census is an example. It has brought the happy news that literacy in India has jumped from 52 to 65 per cent during the last decade. This means that our literacy growth rate has doubled from 0.7 per cent a year in the past to 1.4 per cent. Millions of children have been liberated in the 1990s from the bondage of ignorance, with the greatest gains having come from rural areas, the Hindi states, and among girls. How did this happen? On the demand end, it is parental motivation--parents are increasingly realising, even in the most backward villages, that education is the passport to their child's future. On the supply side, it is a combination of things. First, Literacy campaigns in some states, supported by the internationally funded District Primary Education Program (DPEP) have begun to make a difference. Their central premise is that teachers must be made accountable to local communities to overcome the problem of chronic teacher absenteeism--the scourge of primary education in Hindi rural areas. Because states are bankrupt, they have resorted to employing para-teachers on performance contracts ("shiksha karmi"), and they are outperforming regular teachers. We now have an astounding 500,000 para-teachers in India today! Second, private schools of varying quality, in towns and villages across India have mushroomed. State schools, especially in the Hindi belt, had grown so rotten that people took matters into their hands and pulled their children out of government schools and put them into these private schools, where, at least, the teacher shows up and some teaching does take place. Third, there have been outstanding initiatives in states like Madhya Pradesh, where mass literacy has risen from 44 to 64 per cent in the 1990s. Against this 20-percentage point gain, literacy had risen only 6 points in the eighties, 11 points in the seventies and 6 points in the sixties. Female literacy has also gone up an impressive 22 points--from lowly 28 per cent, it has risen to 50 per cent. Thus, Madhya Pradesh has begun to replicate Himachal's education miracle, and soon it too will stop being a contemptible Bimaru state. Rajasthan and Andhra too are not far behind. Finding the state treasury empty, subversive warriors inside the M.P. government have created an alternative system of 26,000 schools. This is the famous Education Guarantee Scheme, which I wrote about two years ago. Through it, the village creates its own learning space, hires a local teacher on a performance contract, who is accountable to parents through "shala shiksha samitis". Having recognised that "job security" is partially the cause of the disease, the reformers have now ensured that all future teachers in the formal system will be "shiksha karmis" on performance contract. As a result, primary education is gradually being de-centralised and de-bureaucratised, despite resistance from teachers unions. It is becoming community based and this has visibly reduced teacher absenteeism and improved teaching quality. Some critics are dismissive. They see in these initiatives a conspiracy by the state to off-load the burden of primary education to the village panchayats. They rightly point out that para-teachers are sometimes relatives of the village pradhan. They worry that alternative schools might institutionalise dualism. Also, an unscrupulous politician might make shiksha karmis permanent. These are valid concerns. The critics, however, overlook the richness of the achievement. In tests administered by independent experts, children in non-formal schools run by para-teachers in M.P. have consistently outperformed those in the formal government schools. The "joyful learning" curriculum by an NGO, Eklavya, is also making a significant difference in young children's development. The teacher's commitment is turning out to be more important than a B.Ed degree. High salaries and fancy buildings seem to be less important than accountability. The other lesson we are learning is that instead of flaying the state for the umpteenth time for its failure, let us admit the state's limitations in broadly delivering quality education. If it cannot produce bread how can it realistically develop the minds of our young? However, only the state has the resources for universal primary education in our vast country. Hence, the solution is "state aided" schools--government must gradually give up running schools, and become a non-interfering funds provider. Running schools is best left to education professionals, NGOs and "edu-preneurs". Once this happens, new schools will emerge, creativity will blossom, and parents will have choice. The miserable state schools will also improve when they are forced to compete. And if they do not, then parents will pull their children out, and they will either have to close down or be sold off.

HOW THEY GREW RICH 01/07/2001

Contrary to what many believe the economic lives of our ancestors is a story of almost unrelieved wretchedness. Everywhere a small number lived humanely while the great majority lived in abysmal squalor. We forget their misery, in part, by the grace of literature, poetry, and legend, which celebrate those who lived well and forget those who lived in the silence of poverty. The eras of misery have been mythologised and are remembered as golden ages of pastoral simplicity. They were not. In truth, survival was the only order of business. Only recently have progress and prosperity touched the lives of somewhat more than the upper tenth of the population. In the last 200 years the West (and recently the Far East) grew fabulously rich. This miracle was based on harnessing technology and organisation to the satisfaction of human wants, while keeping their economies free from political control, ensuring that private individuals made decisions rather than bureaucrats. The striking character of the West's miracle was its gradualism. There was no sudden change--just gradual year-to-year growth at a rate that somewhat exceeded population growth. The gains at first were not noticeable and it was widely believed that only the rich experienced them. As growth continued through the 20th century, it became obvious that working classes were increasingly turning into middle classes. Poverty also declined from 90 per cent of the population to 20 per cent, or less, depending on the country. The West's prosperity originated in innovations in technology and organisation. As economies expanded, so did their stocks of capital, their expenditures on education and public health, and the accumulation of skills by their work forces. Virtually without thought or discussion, the West delegated to enterprising individuals decision making in the innovation process. But innovations needed to be tested in the marketplace. This required money and competence in engineering, manufacturing, and marketing, especially if the innovator was to capture the rewards of the innovation. These resources came to exist in the ordinary firm. Comparatively free of political and religious controls, markets determined who won the rewards of innovation. The response of the market was the test of success or failure of an innovation. And competition became central to innovation. The market rewarded innovators with a high price for a unique product or service until such time as it was imitated or superseded by others. In the seventeenth century, the West developed a scientific procedure, associated with the names of Galileo and Bacon, based upon observation, reason and experiment. Although artisan inventors invented their own technology in the beginning, the contributions of science to industrial technology became more numerous with time. Did the West grow rich through colonialism? Karl Marx thought so, and he attributed part of the new wealth of the West to its imperialist acquisition of raw materials and markets from overseas. I tend to doubt this because poor, colonised countries did not provide large enough markets. Moreover, imperialist Spain and Portugal did not achieve long-term growth; Switzerland and the Scandinavian countries were not imperialist countries; Germany and United States, which achieved long-term growth, were latecomers to imperialism. And Japan's growth after 1868 totally undermines the case. In India, we have not so far experienced this miraculous transformation. But we will in this century if our economy keeps growing as it has in the last two decades. Compared to the West's historic 3 per cent economic growth we are growing at more than 6 per cent. The key is to keep reforming our institutions. Prosperity is not a matter of national character but of institutions. As East and Southeast Asia have shown, all countries can move from poverty to prosperity. Our economic reforms are creating an autonomous economic sphere from political interference. They are slowly replacing the licence-raj institutions, where bureaucrats made economic decisions with competitive market institutions where entrepreneurs, firms, and markets make economic decisions. In a democracy this process will inevitably be slow unless we can throw up an economic reformer like Margaret Thatcher. However, it will take more than de-regulation to succeed. Widespread prosperity needs the reform of our education and health institutions as well. Even after we replace bureaucrats with competitive markets, we will still need honest constables and efficient judges to dispense speedy justice. Hence, we need to strengthen our administrative institutions. We should not unduly worry that our firms are not delivering innovation, which was at the heart of the West's industrial revolution. We are only ten years old as a free economy, and innovation takes time. Japan has only just become an innovator. Korea and Taiwan are not yet innovators. At this stage we ought to be content to imitate, for innovation often emerges out of imitation. Latecomers have this advantage, and smart nations, like smart entrepreneurs, don't reinvent the wheel.

READERS AND WRITERS 15/07/2001

Since I give my address at the bottom of this fortnightly column, I usually get a fair amount of email and snail mail. And being a diligent sort, I endeavour to read and reply most letters. However, recent events have called into question this process of civilised exchange. One outraged reader wrote recently to say that two of his articles had been rejected by the Times of India. "Why is it," he demanded, "the Times rejects my work, and publishes a fourth rate writer like Gurcharan Das?" I took his letter to a friend at the Times, and tried to sound casual, but my friend could tell that this was no ordinary fan mail. He gave me a sympathetic smile, and clearing his throat, he said, "your writing is not fourth rate--it is third rate, at least". I thought that I had misheard, but he added, "Well, third rate is better than fourth rate, and I hope your head won't get too swollen now" Another provocation came in May, from a reader in Mumbai. In elegant calligraphy, he wrote the most inelegant things. "You disgusting pig, yes, you, Gurcharan Pig. Unfortunately I subscribe to the Times of India, because of which, week after week, I am forced to read the pigshit you punctually keep defecating--glorifying globalisation, free markets, reforms, bullshit, blah blah. Everyone knows that the only real beneficiaries of globalisation are America and MNC's who cheat, exploit and pauperise the rest of the world, particularly, Third World economies. Here is an example of how they cheat…." Strong and dramatic prose, you will agree. My colourful reader went on to give the example of a computer he had purchased, which did not contain the promised software to drive the DVD-rom. He had complained to the dealer, the company, and finally to its headquarters in America. But to no avail. He ended his letter characteristically, "What do you, free market Bastard, have to say about it?" My advice to my reader is that he first cleans his mouth, either with an MNC or non-MNC toothpaste. Better still, like the "nearlynine" Saleem Sinai in "Midnight's Children", he scrub his roof-of-mouth with non-MNC Coal Tar Soap. Next, re-write a straight forward business letter to the same cast of characters, deleting this time all the colourful expletives referring to animals, their excreta, and those that raise doubts about the reader's paternity. I realise that this might sacrifice his natural style, but it might pay-off, and the global capitalist system would also be saved. A reader from Nagpur complains that I am coming between him and his son. "You see, we always read the Sunday paper together as a family under a Banyan tree in our courtyard. We drink tea leisurely and there is harmony in our ancestral home, until we read your column. Then we begin to argue like mad and our peace is shattered. My wife always seems to take my son's side and my brother mine. I fear that my son and I are drifting apart, thanks to you." I wish sometimes that I could write weekly, like Swami Aiyar or Jug Suraiya. The great American columnists, I'm told, wrote five, even seven days a week. I wonder how they had something to say everyday of their lives. Apparently, one of them, Bob Considine, I think, couldn't find anything to write about one day in 1973, and he solved the problem by writing a column, which in its entirety read as follows: "I have nothing to say today." My favourite is the liberal American writer, E.B. White, who wrote for years for the New Yorker. He was more of an essayist than a columnist--the difference being that the essayist's writing seems to endure while the 780-word rectangle, such as this one, loses its appeal in a few days. Flip through the pages of old newspapers and you will find that you are more likely to read the ads than the articles. E.B. White had an endearing modesty and a sense of one's limitations. He taught me to use simple, everyday colloquial English, to adopt an informal and relaxed manner, to claim a deficient memory, and to be flexible--that is, never be afraid to change your mind. The problem with writing in the first person, I have found, is to constantly run the risk of sounding irritatingly egoistic and self-absorbed. George Orwell solved it by pretending to be more modest that one is. He opened his famous essay, "Shooting an Elephant," in a way that both established his importance and downplayed it: "In Moulmein, in Lower Burma, I was hated by large numbers of people--the only time in my life that I have been important enough for this to happen to me."

TWO CONCEPTS OF INDIA 29/07/2001

General Musharraf has come and gone. Whatever maybe the long term impact of his entertaining visit, he did achieve one thing--he made us look within ourselves, and ask once again, who we are as Indians, and how are we different from our neighbour. For the past fifty years, we have grown up with the belief that Pakistan is a monolithic, theocratic state with one religion, one language, and one mind. India is the opposite--with many religions, many languages, many communities and many minds. In the 1990s, with the ascent of the BJP, a second conception of India became popular with, perhaps, a quarter of our voters. Instead of the plural India of the first conception, it views the nation as singular and essentialist, which will be energised by Hindu nationalism. In its view, India has been victim of a thousand years of foreign invasions, and is now threatened by multinationals and particularly American culture. It wishes to restore it subliminally to a pure, pre-invasions, and eternal Hindu past and advance rapidly toward superpower status in the future. The first concept of India, by contrast, is more relaxed, liberal and self-confident. It celebrates the opening up of India in the 1990s to foreign trade, investment, and most importantly to ideas. It thinks of India as a mixture of different peoples and cultures that settled here. In this view, India never had an authentic past; it was always a moving feast and the moments of mixture were in fact the most creative. Historic migrations and wanderings of many peoples and tribes over thousands of years created this India. The subcontinent, in this view, is a deep net into which various races and peoples of Asia drifted over time and were caught. The tall Himalayas in the north and the sea in the west, east, and south isolated the net from the rest of the world and brought into being a unique society. Our caste system may have had its origins in this net, for it made it possible for such a vast variety of people to live together in a single social system over thousands of years. Hence, diversity is India's most vital metaphor--it is a "multinational" nation. It is what plural Europe would like to be--a united economic and political entity in which different nationalities and minorities continue to flourish. In recent years a new generation of historians has enriched this plural conception of India. Their innovative studies have illuminated our regional identities, showing how our national identity is superimposed from above and created usually by the grab for power, with little to do with how ordinary people saw themselves. Moreover, our recent politics are further reinforcing our regional identities. This liberal view, however, does not deny a shared sense of India. It merely warns us to be careful in positing a unifying conception of India based on nationalism. That our minds have finally got de-colonised gives this liberal view of India a quiet reassurance and self-confidence. The year 1981 was the symbolic watershed in this respect, when "Midnight's Children" appeared. The moment Salman Rushdie began to "chutnify" the language of Shakespeare, he opened the minds of the Indian sub-continent. Ever since, contemporary Indian history, "has acquired the air of a fancy dress party…full of chatter, music, sex, tomfoolery, free drinks, and rock and roll, an occasion to which everyone is invited provided they can join in the fun", says Amit Chaudhuri. Dileep Padgaonkar, who produces the worthy 750 word rectangle above mine, reminded us two weeks ago about Sam Huntington's thesis--that an "indestructible fault line" exists along Islamic borders and clashes with neighbours are inevitable. Hence, he says, there will be trouble with the Serbs in Bosnia, the Jews in Israel, Hindus in India, Buddhists in Burma, Chinese in Malaysia, and Catholics in Philippines. Those who hold the second, singular concept of India fully accept Huntington's premise; they believe that permanent peace between India and Pakistan is impossible. Prime Minister Vajpayee is obviously not one of them; otherwise, he would not have invited General Musharraf. Mr. Vajpayee understands better than his colleagues in the Sangh Parivar that India and Pakistan's future will be determined far more by the relentless push of the global economy and communications, supported avidly by our rapidly growing middle classes. The future preoccupations of both peoples will be with rising living standards, social mobility, and the peaceful pursuit of consumer goods. As a result, obsessions with religious identity and fundamentalist attitudes will slowly fade. The issue is not whether Mr. Vajpayee holds the singular or the plural conception of India, but which of the two is likely to prevail? Or will India evolve uneasily from the constant clash of these two competing conceptions?

IT'S ALL ABOUT EXECUTION 12/08/2001

Foreigners often remind us that Indians are a bright people. But foreigners are too polite to add that Indians can also be 'over-smart', and this creates its own problems. We think and argue too much, see too many angles, and don't act enough. It makes hiring and recruiting talent particularly difficult, for all Indians come out sounding well in an interview, and how do you separate the doers from the talkers? National stereotyping can be dangerous and is usually wrong. We have learned this only too well from the history of the violent 20th century. Hence, I prefer to rely on institutions and economic laws to explain human behaviour rather than national character. However, the gap between thought and action is so pervasive in Indian life that I have begun to despair in recent months and I wonder if our weakness in execution is, in fact, a deficit in character. My experience with dozens of Indian companies in the past decade is that while most have acquired a reasonably robust strategy, they implement poorly. I am also associated with a venture capital fund that has invested in 15 Indian I.T. companies, and its experience is that the best firms are not the ones with the best business model but the best executional ability. This may appear tautological--we perform poorly because of poor performance--but it isn't. McKinsey, the respected management consultant, has found the same weakness. In a survey of 35 major companies and interviews with more than 600 executives, it has concluded that "while many Indian companies perform well on strategy, there are lagging in execution". It conducted similar studies around the world, and its international data shows that the best performing companies in the world distinguish themselves from mediocre ones in their ability to execute. High performers, such as General Electric, Sony, and Singapore Airlines, consistently implement better and this is ultimately reflected in their market share, profitability, and share price. Does our national bias against action explain why there isn't a single Indian company with a global presence? Is this also the reason why so many Indian companies are floundering ten years after the reforms? While it is tempting to blame character, the culprit, I am afraid, is more mundane--it is poor skills. And the reason is the historic lack of competition in our market. These skills are learned typically when rivalry is intense and survival is at stake. We have only had real competition in the last decade. So perhaps, it's early. Hence, our business leaders should stop crying for protection, honestly face up to poor execution as the cause of their troubles, and go to real world school of competition and learn these skills. There are outstanding Indian performers, to be sure, but they are exceptions. Reliance owes its consistent success, partially at least, to its awesome project management skills, which allows it to build plants faster than anyone does. A few years ago I was on the jury to select the best among 40 Aditya Birla's companies and I observed the same executional excellence in company after company. No wonder, Hindalco for example, has become a world class aluminium producer. It is the same with Jet Airways. Ask its passengers--they will tell you that it is always on time. HDFC and Sundaram Finance have consistently demonstrated outstanding service levels for decades. A jewel of a company in Bangalore, Himatsingka Seide, is able to command Rs 8,000 per metre for its luxurious silks in Europe and America because it consistently delivers defect-free fabric and always on time. Why do these companies have executional ability when the majority does not? It begins at the top. Their leaders, I have observed, are not content with laying broad policies, but insist on getting into the messy details of the business--monitoring day to day performance, removing obstacles, staying close to employees and motivating them. They reward managers who act and take initiative, and punish those who play safe and behave like bureaucrats. They set clear, measurable goals and create small implementation teams so that people become accountable. Reliance's top management, for instance, monitors daily the number of kilometres of optic fibre that its telecom teams lay on the ground, and motivates them to improve the next day's performance. Thus, these companies get ordinary people to do extraordinary things. Successful executives follow the British scientist, Jacob Bronowski's advice that the world is not understood by contemplation but by action--"the hand is the cutting edge of the mind". The best lesson I learned at Procter and Gamble was how to write its legendary one-page memo, which was its language of action. Good executives, I have observed, do few things. They make sure they are the right things, and they do them brilliantly.

ONE POINT AGENDA 26/08/2001

We commonly make the mistake of blaming our character, or ideology, or even democracy for our nation's failures when the real felon is more pedestrian. The same unhappy inability to translate thought into action that I wrote about two Sundays ago with regard to our companies afflicts our public life with devastating consequences. Nehruvian socialism need not have deteriorated into licence raj had our civil servants possessed better management skills. East Asia grew twice as rapidly as India between 1965 and 1985, not because it saved and invested more, but because it had the ability to make its investments more productive. During the last decade every government has wanted to reform the economy. Yet, why have we suffered heart-breaking delays in implementing the reforms? If we are all agreed about what's to be done, why don't we just do it? We continue to waste our energies on debating "the what" when we ought to focus on "the how". How to reform requires mental application and the ability to implement. And this is precisely what our public figures-both politicians and civil servants-seem to lack. Our hopes rose earlier this year when Mr. Yashwant Sinha announced a brilliant Budget. Mr. Vajpayee said, "People want action, not talk." Finally, we thought, we are going to see the second phase of reforms. But what has happened? The government has been in a repeated state of distraction. First, it was Tehelka, then the stock market scam, then Musharraf's visit, and now UTI's problems. Everything, in short, but the implementation of the Budget, and the Indian people are weary of excuses. Our politicians and civil servants, like our businessmen, seem to be good at defining the broad picture, but they fall apart when it comes to detailed planning, monitoring, readying alternative courses of action, following through and showing the determination to stay the course that eventually leads to delivering results. We don't give enough credit, I think, to Narasimha Rao's executive abilities. The reforms happened in those golden years between 1991 and 1993, not only because Manmohan Singh and he set clear goals, but also because he encouraged his principal secretary, A.N. Varma, to create an executional structure. This was the famous, hands-on Thursday committee of secretaries (of the economic ministries) which coordinated, monitored, gained cabinet consent and implemented reforms week after week. Lest we forget, Mr. Rao's was a minority government at the time, and it too had its share of distractions and scams. Ironically, there appear to be better performers in the states today than in the centre-for example, S.M. Krishna in Karnataka, Chandrababu Naidu in Andhra, Digvijay Singh in Madhya Pradesh. They are quietly transforming their states with the help of handpicked doers from the bureaucracy. One of them, S.R. Mohanty, a civil servant in Madhya Pradesh, succeeded last year in getting patients to pay for services in state hospitals against huge opposition. As a result, the quality of medical care in the hospitals has improved dramatically. Now, as head of the State Bridge Corporation, he has got the country's longest toll road, connecting Indore and Edalabad, going. How he went about it is instructive. Mohanty and his team of three discovered that the PWD had a Rs 120 crore road maintenance fund. With the Chief Minister's support, the team put this money into a sinking fund, and used it to raise Rs 500 crores through bonds with the help of SBI Caps. Having overcome the single biggest hurdle-of financing infrastructure--the team focused only on 3 per cent of M.P.'s roads, which carried 80 per cent of the state's traffic. It opened tenders for the Indore-Edalabad segment on July 2; it got all government clearances by July 11; it issued LoIs by July 18; and developers began constructing the world class highway on July 29. This is implementation. Implementing this Budget (and the second generation of reforms) will need huge administrative skills because of thorny labour, agriculture, and privatisation issues. The Prime Minister has also lost a doer and networker in N.K. Singh, who had so far been quietly coordinating the reform agenda, including the successful telecom reform. Now, Mr Vajpayee and Mr Sinha, if you are serious, you will wake up each morning and remind yourself that nothing is more important to yours, your party's and India's future than implementing the reforms. You will make it your one point agenda as Mr Deng and Ms Thatcher did. You will cancel your six foreign trips because you impatiently want results. Thus, you will bring bite to your Independence promise of making 2001 the "Year of Implementation". Remember, good leaders do a few things, but they bring all theirs and their organisation's energies onto that single focus, and they execute brilliantly. And history does not forget them.

MONSOON IRONIES 09/09/2001

Another splendid monsoon is coming to an end and its effects are lingering in the sultry air. The nights are lazy and green trees rustle pleasantly around the small off-white houses in our compact neighborhood. My mind is uneasy, however, and at odds with tranquil nature. Like many Indians, I am morally outraged that we should be sitting on the largest mountain of grain in the world and yet people go hungry, especially in areas affected by drought. Meteorologists tell us that this is the thirteenth good monsoon in a row, but we know that even in the years of plentiful average rainfall some areas don't get enough rain. The Food Minister is shedding crocodile tears, insisting that he has offered free grain, but "the states are not lifting stocks". The states claim that they are bankrupt and cannot afford to pay for transporting and distributing the food to the poor. Most of us in the cities, despite our reputation for callousness, would be happy to see the poor fed, but we are cynical of the government's ability to implement poverty programs. Rajiv Gandhi's famous warning rings loudly--that only fifteen per cent of the poverty money reaches the poor. Whether it is fifteen or thirty per cent the truth is that a vast sum leaks out. There are two main sources of corruption and inefficiency in our food-for-work programs. One is in honestly distributing food to the poor in return for a fair day's work. The second is in the movement of grain. Now, there is evidence to show that both leaks can be plugged and there are models of success that we can follow. The main disease afflicting food-for-work programs is that the wrong people corner the benefits. Typically, local officials collude with the sarpanch, create bogus rolls, and siphon the food grains. States like Madhya Pradesh have now found an answer--neither local officials nor sarpanches are allowed to decide the food-for-work project or the beneficiaries. It is the gram sabha or the assembly of all adults in the villager. When a food-for-work program is announced, all village men and women assemble together, vote for what asset they want to create in the village--a water tank, or a school building, a road. Those who want to work in exchange for food come forward in the assembly. Although the panchayat executes the poverty project, the gram sabha meets again to ratify the panchayat's accounts. Several sarpanches have already been sacked by their gram sabhas for stealing funds and NGOs in some drought-affected districts of M.P. have confirmed that corruption has declined markedly this year. After the 73rd amendment to the Constitution, one third of the panchayat members everywhere are now women and another quarter or so are also dalits or tribals. Moreover, one third of the sarpanches are also women. Hence, the old upper caste landlords and local BDOs and VDOs are an unhappy lot--they are seeing power and money slipping away. In Rajasthan, corruption has declined thanks to the "right of information" movement, as local officials are forced to open government records to the people. The second source of corruption and inefficiency is in the movement of food. Many welfare experts now advise governments that it is more efficient to give vouchers or food stamps to the poor rather than incur the huge cost of moving, storing and delivering the food to thousands of places. There is evidence from Iraq, U.S., Sri Lanka that vouchers work, and very simply. Instead of food, the beneficiary receives a voucher, which she (or he) exchanges for so many kilos of rice or wheat from her normal store--it doesn't have to be ration shop. The shopkeeper, in turn, exchanges these vouchers for grain when replenishing his stocks. Thus, grains only move through normal retail and wholesale channels. When the state doesn't physically move the food, costs come down and corruption diminishes. And state governments can no longer hide behind the excuse of lack of money for not implementing food-for-work programs. As prosperity has grown in the past two decades, we have learned that the poor are eating other food beside grain. So, a grain-for-work program, if it has to be attractive to the poor, will have to offer far more grain per day's work than in the past. This will increase the subsidy, but it will lower the costly grain mountain faster. With the two biggest obstacles to food-for-work overcome, can we now expect the morally offensive hunger amidst plenty to disappear? Will our leaders now implement massive food-for-work programs? If they don't, rats will get to the food. If they do, the poor might re-elect them. So, they can choose--feed rats or people. It doesn't seem to be a difficult choice since rats don't vote.

A TELLING TALE 23/9/01

This is a tale of two districts, one virtuous, the other vicious. Jhabua, in western Madhya Pradesh, is a success story where forests have regenerated, bodies of water have sprouted, and incomes are growing-all this, because people have learned to help themselves. Kalhandi, in Orissa, is a failure-there is chronic starvation and parents sell their children to pay for food. Both districts are uplands and home to tribal people. Both were once covered with splendid forests, mainly teakwood, but these have been dying in recent years. As forests vanished rains became irregular; village water tanks fell into disuse as government took over their ownership. Increasingly, the two districts became prone to drought, and people began to migrate for six months a year. In the mid-1980s both districts were in the news when Rajiv Gandhi visited them following reports of food riots in Jhabua and the sale of children in Kalhandi. The Centre for Science and Environment reports that in Orissa, the soil conservation department has spent more than Rs. 90 crores in the past 15 years to build 1400 water-harvesting structures. The central government has poured huge sums for constructing micro-watersheds. But these projects have been poorly implemented and massive corruption charges have plagued them. Lazy district collectors allegedly don’t work and the budgeted funds of the drought prone area program (DPAP) and the employment assurance schemes (EAS) are consistently under-spent. Whatever is spent is largely lost in corruption, according to NGOs. “We get complaints of corruption in watershed activities, but the officials belong to the state (rather then the centre) and we can’t punish them,” says N.C. Saxena, former secretary of rural development. It is the opposite story in Madhya Pradesh, where local communities created 706,304 water harvesting structures between February and June alone this year and they will irrigate 52,000 hectares of additional land. The benefits too have come quickly. Decent rains in late June and July filled these village tanks, ponds, and earthen check dams (johads). Madhya Pradesh is succeeding because it is involving people (and NGOs) in managing water and energising institutions of local self-government, while Orissa depends on apathetic bureaucrats to do the job. The people of Jhabua district tell their own story. Residents of Kalakhoont removed three metres of silt from their village tank that had accumulated from the erosion of surrounding hills. The very first rains in June filled the tank and “the stored water will be enough to irrigate more than 61 hectares of land and recharge our old, unused wells,” Nana Basra excitedly told reporters of “Down to Earth.” In neighbouring Datod, villagers built a community dam on the seasonal Mod River to irrigate the surrounding villages. “This is something unheard of in our drought stricken district,” said Balusingh Bhuria, president of the block panchayat. People contributed a quarter of the cost through their labour in these initiatives in Jhabua, and they were ably assisted by an NGO and supported by the state watershed mission. As a result of hundreds of these efforts over the past five years the water table in Jhabua is rising. Satellite pictures confirm that water tanks, lakes, and village ponds have grown visibly and so have trees, shrubs and green cover. The people in Ambakhoda have stopped migrating. “Our hills have become green again and I have crops in my field,” says Manna, a 65-year-old farmer. In Kakradhar “we have plenty of fodder for our cows”, says Jhitra, chairwoman of the village’s forest committee. In Kalidevi, the cropping pattern has changed-villagers get two crops because ground water has risen dramatically and there’s plenty of water after the monsoon is over. The greening of Jhabua district though 218 micro watersheds is an example of people’s participation through watershed committees-its members are water users, self-help groups, and panchayat representatives. And one third are women by law. The watershed committee is ultimately accountable to the gram sabha or the village assembly. For the first time in history, it seems to me, we are dealing with water and drought and water in a different way. Gujarat and Rajasthan have also reported plenty of miracles of community effort during the last drought, but these states are not pushing power down to the people as single-mindedly as M.P. This Gujarat government, in fact, is notorious for sabotaging panchayati raj. The challenge for the future is to look after these people’s water structures, and keep recharging the ground water. Environmentalists tell us that four years is enough for ecological regeneration, and if you maintain a structure for 5 to 8 years then the community will be able to withstand three droughts in a row. That is why I am betting on Madhya Pradesh because it is creating long term, sustainable institutions of local democracy.