Thursday, May 27, 2021

Covid and the bureaucracy: India needs modern institutions that are autonomous, accountable and creditworthy

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

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

Uday Deb

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

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

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

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

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

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

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

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

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

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

Source: Times of India

Sunday, April 25, 2021

Can Covid shift our politics? It’s a national emergency now. Let it bring to an end our Age of Hatred

 The Times of India | April 2021 

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

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

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

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

Illustration: Uday Deb

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

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

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

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

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

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

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

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

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

Source: Times of India

Thursday, March 25, 2021

A tale of two heroes: An Ashoka University donor on the challenges of doing good in today’s world

 The Times of India | March 2021

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

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

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

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

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

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

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

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

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

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

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

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

Wednesday, March 10, 2021

Gurugram Inc won’t expand in Haryana anymore, eyeing hubs like Noida now

 The Print | March 2021

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

It will lead to flight of capital from Haryana

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

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

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

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

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

It will fail in the courts

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

It undermine’s Modi’s vision of one India 

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

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

It will slow national recovery

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

Haryana govt’s claims don’t hold

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

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

Why are bad, self-defeating laws legislated?

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

Thursday, December 03, 2020

Don’t kill 2nd green revolution: Rolling back farm reforms would privilege a small but vociferous group over the silent majority

 The Times of India | December 2020

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

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

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

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

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

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

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

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

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

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

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

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

Tuesday, November 03, 2020

Doing good in India gets harder: Philanthropy should be regulated by an independent regulator, not by the home ministry

 The Times of India | November 2020

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

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

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

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

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

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

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

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

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

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

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

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

Thursday, September 17, 2020

India’s language conundrum: The National Education Policy has skirted elegantly a political minefield. But the obstacle is the teacher

The Times of India | September 2020

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

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

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

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

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

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

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

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

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

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